The bumblebee The IPO (NASDAQ: BMBL) made its debut on February 11th NASDAQ New York Stock Exchange. That’s because it brought the youngest female executive in the world to take a company public. And the price of Bumble stock rose, publicly opening at $ 76 after debuting at $ 43 the day before. This resulted in a market capitalization of $ 13 billion (£ 9.4 billion). Bumble’s share price peaked at $ 79 but has since fallen below $ 72. So does this US stock look like something I should invest in?
Should I invest in Bumble stocks?
Bumble is a social networking platform that consists of a dating app, a business networking arm (Bumble Bizz), and friendship room (Bumble BFF). The company also owns the dating app Badoo and UK gay dating app Chappy through a recent acquisition.
There are a few things I look for in a company before buying stocks as a long-term investment. Leadership is one of them, along with a competitive advantage and room for growth.
I am impressed with the leadership that Bumble CEO Whitney Wolfe Herd and her team have publicly presented. I think it’s always good to see strong leadership and a sense of real ownership of a company. And it seems to me that the 31-year-old founder clearly represents this attitude.
I also think it’s important to understand a business model if I want to invest in it. While I understand what Bumble is, I don’t know that it makes enough of a difference to its competition. It has the dating app which is unique in that “women take the first step”. This is intended to promote a safe and respectful dating experience without abuse and intimidation. It is certainly a welcome change from some of the Seedier offerings available. But is it enough to keep one’s lead?
The dating space is evergreen because there are always people out there looking for love. Therefore, it can do well in a recession. It’s pretty saturated, however, and I get the impression that users get bored easily and jump from one app to the next with ease. I don’t think it would take much before a new contender is on the scene and stealing its thunder. Especially when you consider how far Bumble has come in just seven years.
Playgroup is Bumble’s main competitor, but I find it worrying that the two companies have been embroiled in legal complications in the past. Hopefully that’s behind it now, but the management in these high profile companies seems to be a relatively small group of people. Burning bridges between them so early can’t be good for the future.
Those added extras, able to network and socialize in a platonic way, mean that Bumble users can potentially last a lot longer than competitors who only offer the dating option. However, these features arguably compete with Microsoftowned by LinkedIn and Facebook.
I like the story behind the business and I see room for growth. But it’s still in its infancy, and right now I’m not tempted to invest in Bumble stock. I’ll keep it on my watchlist and see how it goes.
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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, serves on the Board of Directors of The Motley Fool. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of its CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Kirsteen has no position in any of the stocks mentioned. The Motley Fool UK owns and has recommended shares in Facebook, Match Group and Microsoft. Views on the companies mentioned in this article are those of the author and therefore may differ from the official recommendations we make on our subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that taking diverse insights into account makes us better investors.