Dating app company Bumble sees market cap rise to more than $8bn after Nasdaq listing, as investors rush to scoop initial offerings and tech shares
Shares in dating app Bumble rose more than 63 percent in their first day of trading on the Nasdaq exchange last Thursday and continued its rise on Friday, as investors continued to display a strong appetite for new share listings.
The company, which is the parent firm of the Bumble and Badoo dating apps, initially priced its shares at $43 (£31), above its target range of $37 to $39, and sold 50 million shares.
But the shares closed their first day of trading at more than $76 apiece, for a market capitalisation value of about $7.7bn, posting further gains on Friday.
Bumble is one of the rare US companies to launch an IPO while led by a female founder, Bumble chief executive Whitney Wolfe Herd.
Wolfe Herd also co-founded dating app Tinder, but left the company alleging sexual harrassment. Tinder parent company Match Group denied the claims and eventually settled the dispute for about $1m.
Match Group, which owns Tinder, Hinge and several other dating apps, is Bumble’s main competitor and once tried unsucessfully to acquire the firm.
Wolfe Herd founded Bumble in Texas in 2014 with backing from Andreey Andreev, founder of European online dating site Badoo, with the two services also sharing their technical infrastructure.
Andreev sold his stakes in both companies in 2019, and in 2020 Bumble, led by Wolfe Herd, became the parent company of both Bumble and Badoo. The apps together have 40 million active users, 2.4 million of which are paying customers.
Bumble is unusual in that only female users can make the initial move in heterosexual relationships.
In a letter to investors ahead of the IPO, Wolfe Herd said she wanted to change the negative impact of “unequal relationships”.
Wolfe Herd, 31, is the youngest woman to take a company public in the US.
She also joins a short list of women founders who have led IPOs, including Katrina Lake of Stitch Fix, who took the company public in 2017, and Julie Wainwright, whose The RealReal made its market debut in 2019.
Bumble offers its service for free and derives its income largely from subscriptions and in-app purchases, a model similar to that of Tinder and other dating apps.
The company said it is focusing on increasing the number of paid subscribers, but acknowledged that the Covid-19 pandemic has harmed revenues.
Tech share demand
In 2019 revenues rose 35 percent for a profit of $68.6m, but in the first nine months of 2020 growth sank to 15 percent year-on-year, and the company posted a loss of $116m.
Investors have shown strong interest in new listings such as Airbnb, Doordash and Chinese TikTok rival Kuaishou in recent months.
On its debut in Hong Kong earlier this month Kuaishou became the world’s biggest tech listing since that of Uber in May 2019, and the largest public offering worldwide since Saudi Aramco’s in December 2019.
Investors have also rushed to scoop up tech stocks in recent months, driving their share prices aggressively upward, a trend that saw Tesla chief executive Elon Musk become the world’s richest man in January.