As Dating App Bumble Captures Market Share, Citi Says It's Time To Buy

Investing in Bumble may be a good idea for investors now that Citi is recommending it as an investment option.

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An analyst from the Wall Street firm Ygal Arounian started covering the dating app maker with a buy rating in a Friday note, noting that the company offers a growth rate of more than 100% for its Internet business, which is a rarity.

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It is important to note that Bumble's core app has continued to gain a significant share of the online dating market, and the company has recently launched new products that are resulting in greater conversion of paid users. While Bumble's core app continues to trail Tinder in the online dating market, it is still growing.

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He added that "continuing momentum is key since we believe share shifts will be key growth drivers once overall industry growth reaches a maturity point (at least in the US).

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It has been a challenging year for shares of Bumble, as the stock fell 8% this year, following a 38% drop in 2022. Even though shares of the dating site tumbled Thursday, Arounian maintained a $24 price target on the shares, implying nearly a 24% price gain from Thursday's close, despite the drop in shares.

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According to Ahmadian, Bumble's messaging of "women first" and its intention to target younger audiences will also go a long way in boosting the company's stock price going forward. The company is initially pushing internationally, but he still believes there is room for growth, despite the fact that Badoo is facing headwinds due to its exposure to the war in Russia, which is an interesting observation.

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It has also been suggested that improvements in the conversion of paid users and reacceleration of revenue could also result in an upside in estimates, according to Arounian. The fact that Bumble is growing at a stellar rate and that it's earlier in its growth curve like Match and the broader industry justifies its slight premium over both and the broader industry, he said.

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As the analyst pointed out, there are long-term tailwinds in this space, but it also appears to be entering a more transformative era, and many moving pieces are creating some additional uncertainty. It looks like Bumble is building on its future as it puts the right pieces in place.