In this video from the Industry Focus podcast recorded on Feb. 17, Motley Fool contributor Luis Sanchez, Motley Fool analyst Meilin Quinn, and Industry Focus host Nick Sciple discuss the Match Group, Bumble, and the online dating industry.
Nick Sciple: Bumble came public last week. It’s now the second maybe primary way you can invest. Online dating Match has been public for a number of years, has been a juggernaut in the space. Now Bumble coming public as a challenger last week began trading last Thursday on the Nasdaq, closed up 63% on its first day of trading, has a $9 billion market cap last I looked at it this morning. What investors need to know about Bumble, we talk about these different gender dynamics, and Bumble really calls out this women-make-the-first-move dynamic. Meilin, where does the Bumble products standout for you among this sea of dating apps?
Meilin Quinn: Yeah, absolutely. I think the general impression of Bumble is that it’s for sparking more meaningful relationships opposed to Tinder, where folks go for flings and more for the fun, unexpected conversations. I think Bumble’s viewed this way because women, as you mentioned, have to message first, and you have to put in extra effort in this app. Extra effort for men to stand out to women, and extra effort for women to initiate these conversations.
My initial thoughts are, maybe girls don’t always want to message first, for the lazy and shy girls. I can’t help but feel that for heterosexual relationships, it would seem like you’d have to be a real standout guy to get meaningful interactions and define success on Bumble, where the woman has to put in the initial work, especially when you think of data that suggests women judge men more harshly on dating apps. That’s my first instinct that this would be tough on dudes, but perhaps that’s what gets guys to pay up for these extra features.
There could be something, too. I’m interested in seeing what kind of path to profitability emerges for Bumble. As you mentioned, it’s really up to women at the end of the day; it seems like the most successful app will be the one that can retain most women swiping. One thing I love about Bumble is its BFF and networking section that you can make new friends or you can connect with other working professionals. It seems like women are interested in these sections, at least more so than men, to find brunch and shopping buddies on Bumble BFF. With that, Bumble’s found a great way to attract more women and become an all-in-one for women wanting to expand their career, social, and romantic lives.
I certainly get Bumble’s strategy and advantage there. It has a network effect. I’m interested in hearing your thoughts, Luis. I know you looked into Bumble’s financials and IPO prospectus. What do you think of its prospects as a company?
Sanchez: Absolutely. I was looking through the S-1 when the company IPOed, and they really drive home their cultural perspective of being a woman-first company. It’s pretty much throughout the DNA. The founder of the company, actually, her name is Whitney, sorry.
Sciple: Whitney Wolfe Herd.
Sanchez: Whitney Wolfe Herd. I keep mumbling her name. She was actually an early employee at Tinder, which is owned by Match, and she had some really great firsthand experience getting Tinder off the ground. She left in 2014 to immediately found Bumble, and she runs the company today. She’s really built the company in this image. Most of her management team are composed of females. Three-quarters of her board is composed of females. Driven by this women-make-the-first-move product, it’s really led to this phenomenon where relative to other dating apps, Bumble has more women compared to other products, and they claim that women actually monetize at higher rates. Those are some really interesting characteristics that make Bumble stand out.
I think what I really came to is, when it first launched, they had to have a reason why people would use this, so they had a point of product differentiation. But I think several years into their journey as a company, they’ve really cultivated a brand around it and it’s really a lot more than just the app works differently. I really feel like they actually have developed a real brand that they can build a bigger business around.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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