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Bumble Surges after JPMorgan Upgrade
Stock Analysis & Ideas

Bumble Surges after JPMorgan Upgrade

If you’ve been trying to find a date for Christmas, then you’ll likely appreciate dating app maker Bumble (BMBL). A recent analyst upgrade gave the company a new spark. While the new support from analysts is helpful, the company’s current price suggests a bargain in the making. As a result, I’m also bullish on Bumble overall. (See Analysts’ Top Stocks on TipRanks)

Looking at Bumble’s stock charts for the year so far goes a long way toward explaining my bullishness. Bumble saw its highs for the year back in February, then almost immediately after started diving. It took just three months—from February 15 to May 18—for Bumble to lose about half its value.

Bumble did turn things around somewhat from there, with the company challenging the $60 mark back in September. November proved a disaster for Bumble, as the company lost ground once more to hit lows not seen since May. It then shattered those lows to proceed to the lowest point for the year. (See Bumble stock charts on TipRanks)

The latest news also helps matters here. After meeting with management, JPMorgan (JPM) offered some very positive analysis on Bumble. Not only did JPMorgan shift its rating from Neutral to Overweight, but it also hiked the price target to a hefty $55. That makes for an upside of close to 60% based on figures when it was released.

JPMorgan analyst Cory Carpenter noted that the meeting with management made him “increasingly confident” in an upward path for the company. The meeting gave Carpenter support in terms of both the Bumble app’s overall trajectory and how it could better position itself in the dating field.

Bumble’s third-quarter results offered some support too. App downloads were up 21% against the third quarter in 2020. The growth in daily active users outshined growth in monthly active user rates. Carpenter noted that Bumble is also keeping its users longer, with one and seven-day retention rates showing positive figures.

Bumbling into Greatness

Interestingly, JPMorgan was not the only investment firm to comment on Bumble lately. Raymond James indicated that Bumble could be a good play thanks to its “sharp decline since going public.” In fact, Raymond James even noted that it could be a “tax-loss selling bargain” in recent coverage.

Bumble’s numbers certainly have positive potential. Not only are daily users gaining over monthly users, but users are also paying for Bumble in larger numbers. 60,000 users are currently paying for Bumble access, and there’s a clear possibility of further gains from there.

Bumble has also been working on expansion efforts. The company recently unveiled the Bumble Shop, which will offer up what it calls “Bumble Basics.” Bumble Basics are essentially just company-branded merchandise, including hats, sweaters, and T-shirts. Look for accessories and even themed games to emerge from the Bumble Shop. There are even plans for some limited-edition items to be released in conjunction with Aviator Nation.

Wall Street’s Take

Turning to Wall Street, Bumble has a Strong Buy consensus rating. That’s based on seven Buys and two Holds assigned in the past three months. The average Bumble price target of $55 implies 44.9% upside potential.

Analyst price targets range from a low of $46 per share to a high of $75 per share.

Concluding Views

To sum up, Bumble has cratered, but I’m bullish anyway. Why? Because Bumble is also bargain-priced, selling a product that increasingly large numbers of users are interested in and expanding its product line. Granted, I don’t look for Bumble sweatshirts to be the next Armani, but every little bit helps.

Bumble is looking increasingly attractive as its user base grows and becomes more engaged (as measured by the daily growth rate). In addition, with Bumble shares virtually having a belated Black Friday sale, this is a stock increasingly worth looking into.

Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates.  Read full disclaimer >

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