Bumble has boosted the size of its IPO from 34.5 million shares to 45 million shares in a bet on investor enthusiasm for its “women-first” dating app and plans to broaden its products.
The shares would be priced at between $37 and $39 per share, meaning Bumble is now aiming to raise $1.8 billion and targeting a valuation of $7 billion. The IPO was previously priced at between $28 and $30 per share.
The start-up stands as the second-most-used dating app in the U.S., trailing only Match Group’s Tinder. Match Group stock has jumped roughly 117% over the past year, reflecting optimism over the growth potential of the dating app market.
“Online dating has surpassed traditional ways for couples to meet or get the first introduction, and COVID-19 has accelerated this trend,” Rohit Kulkarni, executive director of MKM Partners, wrote in a client note.
Bumble calls itself a “women-first” dating app because it allows women to make the first move. Women, once they match with someone, have 24 hours to start a conversation with their “target.”
According to Bumble’s revised IPO prospectus, online dating is now the most common way for couples to meet in the United States. The North American market is projected to grow about 11% annually, from about $2.0 billion in 2020 to roughly $3.4 billion in 2025.
Bumble’s revenue rose 4% to $376.6 million in the first nine months of 2020 but it lost $84.1 million compared with a profit of $68.6 million a year earlier. More than 40 million people per month use Bumble and its sister app Badoo, the company said.
“We believe there is a significant opportunity to extend our platform beyond online dating into healthy relationships across all areas of life: love, friendships, careers and beyond,” the prospectus said, noting that Bumble is “in the early stages of building products for platonic friendships and business networking with Bumble BFF and Bumble Bizz, respectively.”
Bumble sees “significant upside in our core online dating market” but cautioned that the dating industry “is highly competitive, with a consistent stream of new products and entrants.”