Shares of online dating app Bumble (NASDAQ:BMBL) fell 7.8% in the pre-market session after CEO and Founder Whitney Wolfe Herd announced she is stepping down from her role at the company. The move comes as a surprise, especially with the company reporting its Q3 earnings tomorrow. Herd will be replaced by Lidiane Jones, who previously served as CEO of Slack. Herd's departure serves as a cautionary flag for investors when considering that sentiment around the dating category has also been subdued for the past year. Market saturation is top of mind for investors as paid subscriber growth is slowing after getting a boost from the pandemic.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Bumble? Access our full analysis report here, it's free.
What is the market telling us:
Bumble's shares are very volatile and over the last year have had 29 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The biggest move we wrote about over the last year was 6 months ago, when the company dropped 7.3% on the news that the company reported first-quarter results that narrowly topped analysts' revenue, paying users, and earnings per share (EPS) estimates, but missed on free cash flow. Revenue and adjusted EBITDA guidance for the next quarter were below Consensus. Despite this, management remained optimistic, stating that "the momentum in the business sets the company up to continue delivering profitable growth." Finally, it is worth calling out that sentiment and expectations were lowered going into the quarter, as BMBL provided an intra-quarter filing related to a secondary offering that dampened enthusiasm around payers. Therefore, while this was a mixed quarter, it was 'better-than-feared.'
Bumble is down 36.1% since the beginning of the year, and at $13.07 per share it is trading 53.1% below its 52-week high of $27.86 from February 2023. Investors who bought $1,000 worth of Bumble's shares at the IPO in February 2021 would now be looking at an investment worth $185.89.
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