Bumble valued at US$8.2b as investors fall in love with dating app

Bumble received a warm welcome from Wall Street. Photo / 123RF

Bumble, the online dating business, received a warm welcome from Wall Street on Wednesday, pricing shares in an initial public offering above their marketed range and valuing the company at more than US$8 billion ($11.1b).

Bumble — whose properties include Badoo, which is popular among European match-seekers, as well as the eponymous app — sold shares at US$43 a piece, raising US$2.2b from investors.

In a sign of the hot demand for emerging tech companies, Bumble increased the number of shares it sold on Wednesday while also surpassing its expected price range of US$37 to US$39.

The listing will be a milestone for Bumble founder Whitney Wolfe Herd, who has battled competitors while championing a policy that requires women to "make the first move" on the app.

It could also heighten competition between Bumble and its dominant industry rival Match Group, which owns Tinder, OKCupid and Match.com and is already listed in the US.

The offering marks a quick turnround for Bumble, which sold a majority stake to Blackstone in 2019 in a roughly US$3b deal. At the IPO price, the company would have a market capitalisation of US$8.2b, based on the total number of shares outstanding.

IPO filings disclosed that Wolfe Herd received US$125 million in proceeds as part of the Blackstone transaction, as well as a loan provided by the company, which was later settled as part of an apparent compensation scheme.

The company said it planned to use proceeds from the offering largely to repurchase shares from pre-IPO owners and pay down debt. Bumble's private owners will retain about 97 per cent of the company's voting rights following the offering.

Competition is intensifying among the biggest companies offering dating apps. On Tuesday, Match announced that it was buying South Korean video chat company Hyperconnect for US$1.7b, in a move that expands its portfolio further into Asia.

Bumble has in the past accused Match of multiple attempts to buy, clone and "intimidate" the company, before both parties last year settled several tit-for-tat lawsuits over allegations of patent infringement and the stealing of trade secrets.

Separately, Bumble faces competition from Facebook, the world's largest social media company, which started rolling out its own dating product in 2019.

Youssef Squali, head of internet and digital media research at Truist Securities, said that while Match had built up a strong portfolio of apps across a variety of "niches", consumers tended to use multiple dating apps at once.

"The market is large enough to accommodate multiple success stories," Squali said. "It's not an 'either or' situation."

Bumble reported that it swung to a loss of US$117m in the first nine months of last year on revenues of US$417m, as revenue growth slowed. The company said transaction costs factored into the losses.

Goldman Sachs and Citigroup served as lead underwriters on Bumble's offering.

Written by: Miles Kruppa and Hannah Murphy

© Financial Times