Austin dating app Bumble sets price for $2.2 billion IPO, will start trading Thursday

Getting set to make a grand entrance into the stock market, Austin-based dating app maker Bumble on Wednesday evening set the trading price for what it expects to be a $2.2 billion initial public offering of stock on Thursday. 

Bumble expects to sell 50 million shares of its  Class A common stock at $43 per share, the company said in a filing with the U.S. Securities and Exchange Commission. The shares are expected to begin trading on the Nasdaq exchange Thursday using the symbol “BMBL”  The underwriters for the offering also have a 30-day option to purchase up to 7.5 million shares, the company said.

Bumble has revised its IPO target upward several times.  The company said earlier this week that it expected to sell 45 million shares for $37 to $39 apiece, which would have put the IPO's value at about $1.8 billion.

The latest IPO could put Bumble's valuation at between $8 billion and $9 billion, based on the number of outstanding shares, according to the securities filing. 

The IPO would cap a remarkable journey for Bumble, which was founded in 2014 by Austinite Whitney Wolfe Herd, who previously worked for the dating app company Tinder.

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Bumble operates similarly to apps like Tinder, where users swipe left or right on preferences.  However, the app, which has more than 100 million users, only allows women to initiate a conversation or contact.

The company has two apps, Bumble and Badoo, which have over 40 million users on a monthly basis. The business has expanded from a dating app into a women-centric social networking platform that includes friend and business networking options.

In 2019, private equity giant Blackstone Group purchased a majority stake in Bumble and its parent company of the same name. The deal valued the company at about $3 billion at the time.

Wolfe Herd will own about 11% of outstanding interests in Bumble and control 14% of the voting power, according to the company's securities filings. Blackstone will own about 67% of the outstanding economic interests in Bumble and control 83% of the outstanding voting power.

Bumble’s IPO and opening valuation will open significantly higher than competitor Match Group’s 2015 IPO, which was valued at $2.9 billion when it raised about $400 million.  The rival is the parent company of a number of dating platforms including Match.com, Tinder, Plenty of Fish, Hinge and OkCupid.

In a securities filing, Wolfe Herd said Bumble has the ability to become a "preeminent woman's brand" where people can meet "no matter who you might be looking for or what stage of life you're in." 

"While we are proud of how far we have come, having grown from a community of just a few people to an IPO, today is just day one. This marks the start of a very bright future for Bumble Inc, one we believe will change lives and drive great value for our shareholders," Wolfe Herd said in the securities filing. "Our mission, values, commitment to improving relationships globally, and dedication to our communities will continue to fuel us for the long run."

Bumble generates revenue through a subscription service on its app, which also offers free features and charges for additional services.  

The company reported revenue of $376.6 million in the first nine months of 2020, with the company reporting a net loss of $84.1 million. That compares to the first nine months of 2019, during which reported revenue of $362.6million and the company reported a profit of $68.6 million. For 2019 in total, the company reported $488.9 million in revenue.

Wolfe Herd previously said the company was profitable since its second year. 

Amber Gunst, CEO of the Austin Technology Council, said Bumble is joining the ranks of Austin's homegrown success stories. 

“This proves to companies and financial institutions outside of Austin that we are building really strong and successful companies here,” Gunst said. “This isn't a surprise to Austin founders, and companies that have chosen to relocate to Austin. Our city has the ability to build and develop great products, and great opportunities for companies to succeed.  This just gives the outside world a better understanding of what our companies are and how great our products are that we're building here.”

Gunst said Bumble has set itself apart as a preeminent brand. Going public will give the company more funding and the ability to take new risks and launch new products, Gunst said, as well as giving it leverage on the global market.

“Bumble didn't just create a dating app. They created a social movement that was around a safe environment for women to go out and meet a potential significant other,” Gunst said. 

Bumble goes public following a busy year for initial public offerings.  In 2020, companies saw the biggest IPO capital raising activity in a decade, according to a report from law firm Baker Mckenzie. Technology companies alone had 257 listings worldwide which raised $55 billion.  

The company's $2.2 billion IPO would easily put it among the biggest deals of 2021 so far, and would also follow a recent trend of megadeals, or IPOs valued at over $1 billion. In January software vendor financial technology company Qualtric raised $1.55 billion with an initial public offering, and Affirm Holdings raised $1.2 billion, and solar-power company Shoals Technology Group raised $1.93 billion. Several deals in 2020 also raised well above $1 billion including AirBnB and DoorDash, which each raised more than $3 billion. 

Angeline Close Scheinbaum,  an associate professor of marketing at Clemson University, said going public is an indication that Bumble is operating from a position of strength. She said the timing of the IPO  – just before Valentine's Day as people still adjust to the pandemic and crave social connection – is smart for the company. 

Close Scheinbaum, who wrote a dissertation on e-dating in 2006, said she never expected to see the industry grow to be a multibillion-dollar industry.  She said Bumble's early focus on women and safety, and the authenticity of having a woman founder, helped set it apart in the competitive dating market

She said Bumble's rapid growth has come because of its positioning as a "preeminent global women's brand," making it more than just a dating company.  Close Scheinbaum pointed to Uber as another technology company that has been able to position itself in a wide market.

"It gives them the opportunity to go into related social-related relationship-related markets and future acquisitions down the road, so I do think that it's better to start with this broad position because it helps the future of the company," she said. 

Wolfe Herd is one of few women founders who have led a company to an IPO. Business Insider reported in January that only about 20 women founders have led a company through the IPO process since the New York Stock Exchange was founded in 1817.  Companies led by women and people of color also still see significantly less investment and are less likely to go public. 

Gunst said Bumble is showing the world that Austin wants to support and grow women-led and founded companies. 

“This is giving a unique opportunity for women-led and women-founded companies to realize that Austin is a market that's going to be supportive to them,” Gunst said. “That's not the case in most cities that are focused on tech. They're still focused on supporting and promoting and moving that male founder forward. You're seeing that happen more and more in Austin that women-founded women-led companies are doing great things.”