Why Bumble Stock Fell 12% in July

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What happened

Shares of Bumble (NASDAQ:BMBL) lost ground to a booming market last month, falling 12% compared to the 2.3% increase in the broader market, according to data provided by S&P Global Market Intelligence.

The decline added to short-term losses for the newly minted public company, which is down over 30% since its February IPO. July’s slump can be tied to waning excitement about the dating app specialist’s business, and concerns about bad news on the way in its mid-August earnings report.

A woman checks her smartphone while sitting at her laptop.

Image source: Getty Images.

So what

Bumble’s first-quarter announcement in early May contained some warning signs about a growth slowdown. While revenue is spiking compared to a year ago, the pandemic boost might be fading. User gains have fallen to less than 5% quarter by quarter compared to over 20% in the early days of the COVID-19 outbreak.

That slowdown has Wall Street fretting about Bumble’s potential, considering its relatively high valuation and the crowded market for dating apps.

Now what

Management can dispel some of those worries by showing strong user engagement in its upcoming earnings report. On Aug. 11, the company will reveal whether user gains accelerated as pandemic restrictions lifted through June. We’ll also find out if Bumble was able to extend the progress it made at generating positive earnings in the first quarter.

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The big question heading into that report is whether management is more (or less) confident about the wider 2021 year. Its current forecast calls for the tech stock’s sales to land between $724 million and $734 million this year after reaching $542 million in 2020.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.



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