Although Wall Street Remains Hopefully on Bumble Earnings, There’s No Doubt That Inflation Plays a Huge Role in Lackluster Performance
Bumble stock over the entire year of 2022 has fallen 30%. No big surprise there. We’re in a contracting economy with inflation on the rise.
While Bumble went over its projected target by market analysts for cents per share, it fell short of Wall Street’s projected earnings of $237 million. Bumble posted its third-quarter earnings on Thursday: 14 cents per share on total revenue of $232.6 million.
Despite this lackluster performance, Wall Street remains hopeful. During Thursday trading, shares of Bumble shot up 10% earlier in the session and then rose an additional 2.3%, indicating that Wall Street still has confidence in Bumble closing the gap. Wall Street has not given up on the roller coaster just yet.
Bumble, the dating app where women make the first move, is not the only platform out there that’s suffering losses. Even brands like Tinder and its parent company MatchGroup are reporting similar shortcomings, many claiming the problem stems from younger customers who do not have as much disposable income as they once did.
And how true this is! Inflation has been on the rise now for the better part of a year and a half to two years. With the cost of gas and goods continually rising, people do not have as much disposable income as they once did two or more years ago. Your dollar in 2022 doesn’t take you as far as it once did in, say, 2019 or 2020.
And inflation doesn’t bode well for the Gen Z crowd who have not had the time to build a savings account or the time to set themselves up to get high-paying jobs in their respective industries. And if we look at the demographic that is currently using Bumble, we’ll find it’s comprised of singles anywhere from 18 to 29 years of age: Gen Z.
In order to survive in this economy, people will begin cutting out non-essentials. Cancel a magazine subscription here, delete a dating app there, and that opens up a budget so people can afford the higher cost of goods caused by inflation.
Wall Street remains optimistic about Bumble’s earnings, however. Their projection for the fourth quarter is $253.7 million in total earnings. And while target prices from analysts at J.P. Morgan and RBC Capital Markets have been cut from $35 to $29 and $33 to $23, respectively, investors, analysts, and Wall Street experts have a lot of faith that Bumble will hit its projected earnings.
Some cite their confidence stems from the college bundle that Bumble has recently introduced that should gain momentum heading into the final months of this year and into 2023. Others claim that as long as Bumble sustains its net payer add story, they’ll be out of the woods by the end of the year.
However, Bumble is predicting a fourth quarter between $232 million and $237 million. This suggests little to no growth. Bumble has a much more bearish take on the situation at hand.
Bumble higher-ups claim that their earnings are somehow being throttled by $16 million for foreign currency movements. They also claim that $5 million is in jeopardy over Ukraine, somehow (you do the mental gymnastics to figure that one out). I think we all know who the real culprit is here: inflation.
Here’s Our Hot Take.
It’s inflation, plain and simple. The cost of everything is up right now. People don’t have as much disposable income as they once did. We’ll see what happens with the Bumble earnings at the end of the year, and we wish them all the best in hitting their goal, but in this contracting economy, it’s no surprise that the predominantly Gen Z user base is dropping Bumble membership in favor of paying for gas and groceries.