Shares of Bumble Inc (NASDAQ: BMBL) are up more than 10% on Tuesday after JPMorgan said the stock had a lot of room to run in the coming months.
Cory Carpenter sees another 50% upside
In a note this morning, analyst Cory Carpenter upgraded Bumble to “overweight” with a price target of $55 that represents another 50% upside on top of Tuesday’s rally.
Carpenter now sees Bumble as a better way of playing the online dating space than his previous pick and industry leader, Match Group. Stating his reasons for being bullish, the analyst wrote:
We come away from our BMBL management meetings increasingly confident in Bumble app’s trajectory and longer-term positioning within the dating/relationship ecosystem.
Other reasons for his “buy” call on the stock included the “BFF” feature and valuation that he finds much more appealing for Bumble than any other player in this sector. The stock is down roughly 50% from its listing price in early February.
User growth is expected to reaccelerate in the current quarter
According to the JPMorgan analyst, the underlying momentum in active users and user retention could serve as a catalyst for the stock. Last month, Bumble said revenue from its namesake dating app in the fiscal third quarter was up 39% year-over-year.
The Texas-based company narrowed its net loss, beat estimates, and gave strong guidance for the future, but the stock continued to tumble in the subsequent weeks on a sequential decline in user growth.
Carpenter confirmed, however, that the slowdown was related to temporary payment restrictions on Google Play, and growth is likely to catch up in the holiday quarter. He further wrote:
We expect Bumble app net adds in 2022 to be > 2021 driven by product & monetization focus on the pre-match experience, lower-end tiers (i.e., college bundles), & consumables – which, if correct, suggests healthy upside potential to consensus net adds to 326K in 2022.
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