Bumble (BMBL) shares rallied more than 35% on Thursday after the online dating apps company came in ahead of Q4 revenue estimates and issued slightly better-than-expected top-line guidance. The post-earnings surge helped BMBL break above its key moving averages (20-day, 50-day, 100-day) today, indicating bulls are now in control across multiple timeframes.
However, there’s reason to treat these gains as an opportunity to trim exposure to Bumble stock, which is now trading at a year-to-date high.
While better-than-expected, Bumble’s Q4 revenue, nonetheless, represents a 10% decline year-over-year.
Investors must use caution when buying BMBL shares at current levels, as the number of paid users across the company’s apps also tanked about 11.5% last year. And while management attributed much of it to a deliberate move away from low-intent users, a massive loss of more than 400,000 paid users suggests the firm’s Tech Stack 2.0 and AI initiatives are failing to fully offset the shrinking user funnel.
Note that Bumble has a history of closing April with more than 8% decline, a seasonal trend that makes it even less attractive to own in the near term.
Bank of America Securities maintained its “Underperform” rating on Bumble shares following the earnings print and lowered its price objective to $3.30, indicating potential downside of about 13%.
According to analysts, while the EBITDA beat was impressive, it was largely driven by drastic cost-cutting rather than sustainable growth.
BofA expressed concern over the soft dating industry and limited visibility into when user growth will actually bottom out.
With revenue still trending downward and losses widening, the investment firm remains skeptical that the current technical breakout will hold without a fundamental boost to user acquisition.
Other Wall Street firms, however, aren’t as bearish on BMBL stock for the next 12 months as the Bank of America Securities.
According to Barchart, the consensus rating on Bumble sits at a “Hold” currently, with the mean price target of about $4.48 signaling potential upside of another 20% from here.
