Bumble stock price jumped by over 25% on Wednesday after the company delivered a plan to slash costs as its business slows. BMBL jumped to a high of $6.50, the highest point since February, and 85% above the lowest point this year.
Bumble lays off staff as its business slows
Dating companies like Bumble and Match Group are going through a major challenge as the number of users avoid paying for the service. This explains why the Bumble stock price has plunged by over 92% from its highest point on record, lowering its market capitalization from $14.8 billion to $860 million today.
Match Group, the biggest player in the industry, has also plunged from $179 in 2021 to $30 today, bringing its market cap from over $50 billion to $7.5 billion today. Match owns popular companies like Tinder, Hinge, an OkCupid.
This slowdown explains why Bumble said that it would lay off about 30% of its employees as it seeks to preserve cash. It hopes that these layoffs will save it over $40 million annually. The CEO said:
“Intentional rebuilding requires hard decisions. Today, we are marking one of the most difficult: we are reducing the size of our team. This decision is not a reflection of any individual but rather where we are going as a company and what we are building for.”
These layoffs came after the company’s results showed that its business continued to slow down in the last quarter. Its quarterly revenue dropped by 8% to $247 million, while the app revenue fell by 6% to $201.8 million.
Bumble’s total paying users remained unchanged at 4 million, while those using its application fell by 1% to 2.7 million. These numbers mean that many people are no longer interested in paying for its service.
Additional data showed that the average revenue per paying user in the Bumble App dropped to $24.8 last quarter, down from $26.34 in the same period a year earlier. This decline happened as the number of users plunged from 2.73 million to 2.7 million, while its revenue fell.
Read more: Very bad news for Bumble and Match Group stocks
Growth slowdown to continue
Anlysts anticipate that Bumble’s slowdown will continue this year and next. The average revenue estimate for the current quarter is $242 million, down by 9.90% from the same period last year.
Bumble’s revenue will then plunge by 12.9% in the coming quarter to $238 million. For the year, analysts anticipate that its revenue will fall by 10% to $958 million followed by $922 million next year.
Worse, the current Bumble stock price is higher than the average estimate by analysts. The average estimate is $5.87, lower than the current $6.52, a sign that investors believe that it is overvalued.
Bumble stock price technical analysis
BMBL stock chart by TradingView
The daily chart shows that the BMBL stock price went parabolic after the company announced job cuts. It jumped to a high of $6.52, the highest level since February. It has soared by over 83% from the lowest point this year.
The stock moved slightly above the key resistance level at $6.21, the highest point on May 28. It also moved above the 50-day moving average. Also, the Relative Strength Index (RSI) has pointed upwards.
Therefore, the stock will likely retreat in the coming days as it loses its momentum. If this happens, it will likely drop to $5, and then resume the uptrend.
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