Bumble Inc Shares Drop

Investing.com — Bumble Inc (NASDAQ:BMBL) shares dropped in premarket US trading on Friday after analysts at KeyBanc downgraded their rating to “Sector Weight” from “Overweight.”

Revenue Forecast Cut

The stock previously slumped sharply in August after Bumble cut its annual revenue forecast, exacerbating concerns about the group’s future growth.

Investors flagged particular worries around the company’s refreshed application and the launch of new features like “Opening Moves,” which allows women to establish an opening question that all possible matches can answer.

Bumble, which operates its namesake app, said it now expects to post full-year revenue growth of between 1% to 2%, down from previous expectations of 8% to 11%.

Q3 Sales Below Estimates

Third-quarter sales are seen at between $269 million to $275 million, well below analysts’ estimates of $296.1 million, Reuters reported, citing LSEG data. Second-quarter revenue also missed Wall Street projections.

Management’s Insights

Chief executive Lidiane Jones told analysts in a post-earnings call that although the app changes may turn away some users in the near term, the company believes the shifts will “ultimately result in a more authentic and better experience” over time.

Bumble also flagged that it will slow some monetization efforts, including a push to expand its Premium+ offering in the second half of this year.

Analyst Commentary

In a note to clients, the KeyBanc analysts said the app relaunch, and the “Opening Moves” feature in particular, undermine Bumble’s core differentiating factor from its peers.

This disrupts Bumble’s distinguishing feature of having women make the first move after a match. We believe this has made Bumble more competitive with other brands,

the analysts wrote. They added Bumble is “fixing itself” at a time when rival Match.com’s brands “are in recovery.”

However, they noted that these headwinds to user engagement could be more in the near term than deeper “structural” issues.

If the issues with engagement prove to be more transitory and users warm to the changes, we believe this could drive upside,

the analysts said.

(Reuters contributed reporting.)