| Austin American-Statesman
Austin-based dating app company Bumble made a stunning debut on Wall Street on Thursday, raising $2.15 billion with its initial public offering of stock and seeing its share soar more than 80% in the early minutes of trading.
The company’s shares debuted at $43 apiece, but quickly jumped, rising as high as $79.60 per share before dipping back to around $74 in early afternoon trading. The company’s market cap on is first day was close to $14 billion.
“Today is day one of our commitment to our community and shareholders to build out our long term vision, to be the platform to meet new people, no matter who you might be looking for, whichever life stage or situation you’re in,” Bumble CEO and founder Whitney Wolfe Herd said at the opening bell. “We are humbled and grateful to be with you today. We look forward to building the future of love, friendship, networking, and community as we chip away at archaic gender dynamics and make the internet, a kinder, and more accountable place. I want to thank the remarkable women who paved the way for Bumble by supporting and championing each other, we can break down barriers for the next generation of women and other marginalized communities.”
The company has seen rapid growth since Wolfe Herd founded it in 2014, previously working for dating app company Tinder. Bumble operates similarly to apps like Tinder, where users swipe left or right on preferences. However, the app, which has more than 100 million users, only allows women to initiate a conversation or contact.
In a securities filing, Wolfe Herd said the company has the potential to become a “preeminent global woman’s brand” and be a place to meet new people “no matter who you might be looking for, whichever life stage or relationship you’re in.”
Bumble president Tariq Shaukat said the IPO is a great milestone and a validation moment for the team.
“We just couldn’t be more excited about the vote of confidence in the business and what we’re doing and the idea that you can have a, a mission oriented business that is also a great business and one that investors want to invest in,” Shaukat said.
The company has two apps, Bumble and Badoo, which have over 40 million users on a monthly basis. The business has expanded from a dating app into a women-centric social networking platform that includes friend and business networking options. As of September, the company’s apps have 2.4 million paying users in more than 150 countries, according to the securities filing. The company also said it has 42 million monthly active users as of the third quarter of 2020.
Bumble’s IPO and opening valuation opened significantly higher than competitor Match Group’s did in 2015. The competitor, which is the parent company of a number of dating platforms including Match.com, Tinder, Plenty of Fish, Hinge and OkCupid, was valued at $2.9 billion when it opened and raised about $400 million.
Bumble already upsized its initial estimates several times before it opened Thursday. Wednesday evening, the company set the trading price for a $2.2 billion initial public offering of stock. Bumble said in the filing it expected to sell 50 million shares of its Class A common stock at $43 per share the company said in a filing.
The target put Bumble’s valuation between $8 billion and $9 billion, based on the number of outstanding shares.
Earlier this week, the company estimated it expected to raise as much as $1.8 billion from its initial public offering of stock, selling 45 million shares for $27 to $39 apiece, according to the filing. Last week it estimated it would look to sell 34.5 million shares at $28 to $30, putting the IPO at just over $1 billion.
Wolfe Herd owns about 11% of outstanding interests in Bumble and controls 14% of the voting power, according to the company’s securities filings. Private equity giant, Blackstone, which has held a majority stake in Bumble since 2019, owns about 67% of the outstanding economic interests in Bumble and controls 83% of the outstanding voting power.
The private equity giant Blackstone Group purchased the majority of Bumble and its parent company of the same name in a deal valued the company at about $3 billion.
Bumble generates revenue through a subscription model on its app, which also offers free features and charges for additional services. Wolfe Herd has said previously that the company was profitable since its second year.
For the first nine months of 2020, Bumble saw revenue of $376.6 million, with the company reporting a net loss of $84.1 million. That compares to the first nine months of 2019, when the company reported revenue of $362.6 million and a profit of $68.6 million. For 2019 in total, the company reported $488.9 million in revenue.
Shaukat said the company is still in its “early innings” on the dating side of the product as well as its friendship and business products. He added there’s also lots of room to continue to grow globally.
“We think there’s a lot of opportunity,” Shaukat said. “There’s a lot of ways that we’re serving users. People don’t compartmentalize their life you have this pandemic of loneliness happening in the world, you’ve got a lot of people who are really trying to find more and more ways to connect and we want to be there to help them out in all facets of their life and of their life cycle.”
The company joins a wave of significant IPO activity. Last year, companies raised the biggest IPO capital activity in a decade, according to a report from law firm Baker Mckenzie. Worldwide technology companies alone had 257 listings which raised $55 billion.
There were only four IPOs in 2020 that were larger than Bumble’s: vacation rental hub AirBnB, which raised $3.5 billion; food delivery service DoorDash, which raised $3.4 billion; data service company Snowflake, which raised $3.36 billion; and Palantir Technologies, which raised $2.6 billion.
The company’s is also easily among the biggest deals of 2021 so far, and would also follow a recent trend of megadeals, or IPOs valued at over $1 billion. In January software vendor financial technology company Qualtric raised $1.55 billion with an initial public offering, and Affirm Holdings raised $1.2 billion, and solar-power company Shoals Technology Group raised $1.93 billion. Several deals in 2020 also raised well above $1 billion including AirBnB and DoorDash, which each raised more than $3 billion.
Wolfe Herd is one of few women founders who have led a company to an IPO. In January, Business Insider reported that since 1817 when the New York Stock Exchange was founded, only about 20 women founders have led a company through the IPO process. Companies led by women and people of color also still see significantly less investment and are less likely to go public.
Wolfe Herd is also one of the youngest women CEOs to take a company public and will have over 70% women on the board.
Amber Gunst, CEO of the Austin Technology Council said the company joins a number of successful exits by Austin-area companies.
“This just gives the outside world a better understanding of what our companies are made of, and how great our products are, that we’re building here,” Gunst said.
Gunst said Bumble has set itself apart as a preeminent brand, and going public will help give the company more autonomy, and more funding. In turn, it will give Bumble the ability to take new risks and launch new products, as well as give it leverage on the global market.
“They didn’t just create a dating app,” Gunst said. “They created a social movement that I think is very unique, and it’s incredibly special. I’m very proud that they built it here in Austin.”
Angeline Close Scheinbaum, an associate professor of marketing at Clemson University, said Bumble going public indicates the company is operating from a position of strength. She said the timing – just before Valentine’s Day as people still adjust to the pandemic and crave social connection and interactions become increasingly digital – is smart for the company.
Close Scheinbaum, who wrote a dissertation on e-dating in 2006, said e-dating, now a multi-billion dollar industry, has grown more than she could have ever expected at that time. She said Bumble’s early focus on women and safety, which were early concerns for the industry, and the authenticity of having a woman founder helped set it apart in the competitive dating market.
She said Bumble’s rapid growth has come because of its positioning as a “preeminent global women’s brand,” and more than just a dating company. Close Scheinbaum said Uber is another technology company that has been able to position itself in a wide market.
“It gives them the opportunity to go into related social-related relationship-related markets and future acquisitions down the road, so I do think that it’s better to start with this broad position because it helps the future of the company,” she said.
Close Scheinbaum said Bumble’s ability to build a trustworthy brand, especially among the woman will continue to give it leverage as it expands into related product categories.
Gunst said Bumble’s success is an example of Austin’s desire to support and grow women-led and founded companies. She added that other tech cities are still focused on supporting, promoting, and moving male founders, but Central Texas is starting to see more and more women-led companies with big success.
“It’s showing the world that we not only encouraged female founders and female-led companies, but we want them here,” Gunst said. “We don’t just want them here to make our numbers look good, but because we want to see them at the same height that Whitney Wolfe Herd has hit.”
Gunst said Bumble’s success should help open investors eyes to the possibilities for women-led companies. Companies led by women and people of color still see significantly less investment and are less likely to go public.
“This is going to open the eyes for a lot of investors to what a woman founded in a woman-led company can do. The fact that they’re not investing in these companies is not giving their opportunities and their portfolios, the opportunity to really find those companies that have the ability to do something special in the same way that Bumble did,” Gunst said.
Shaukat said the company also plans to keep growing in Austin.
“We’re thrilled to be part of the Austin community and everything that the vibrancy that Austin has to offer,” Shaukat said. “The tech ecosystem here just keeps building and building and getting stronger so we’re excited to be a part of it.
