By Kritika Lamba
March 12 (Reuters) – Bumble shares surged more than 40% in early trading on Thursday after the company posted impressive fourth-quarter earnings and unveiled an AI-driven overhaul of its apps to attract younger users.
The reversal comes after years of losses and eroding investor confidence, with the stock losing half its value last year as growth in the online dating market slowed amid fierce competition.
CEO Whitney Wolfhard is betting that a revamped product could spur growth and appeal to younger consumers who complain of souping fatigue.
The company is gearing up to launch Bumble 2.0, which uses artificial intelligence to enhance quick photo swipes with a scrollable profile of short chapters that reflect a user’s interests, lifestyle and personality. Heard also said that Bumble could experience “no sweeps” in some markets.
However, the analyst noted a caution about the degree to which the redesign will revolve around Bumble’s fortunes. They see signs of “significant innovation” in an industry that has seen little change since swap-based design became the standard.
The history category has “many false starts,” analysts at Jefferies said. “While the initial signs of stability are encouraging, we need to see more sustained progress for recovery.”
Dating applications such as Matchgroup Hinge are also developing AI-powered tools aimed at improving the user experience to win back younger users as the dating apps race to adapt to changing preferences.
Bumble reported fourth-quarter revenue of $224.2 million, topping analysts’ estimates of $221.3 million, while average revenue per paying user rose 7.9% to $22.20. Its performance-marketing costs have been reduced by more than 80% annually.
Analysts at Raymond James said near-term momentum for Bumble still depends on the stability of paying users and proves that the post-reorganization ecosystem can grow without relying heavily on paid acquisitions.
The stock trades at 3.55 times its estimated earnings for the next 12 months, compared with 11.05 times for the peer group.
(Reporting by Akriti Shah and Kritika Lamba in Bengaluru; Editing by Anil De Silva and Ditty Pujara)
