JPMorgan upgrades Bumble, sees 65% upside for dating app stock

Published Tue, Dec 7 20217:07 AM EST

JPMorgan upgraded shares of Bumble on Tuesday after a recent meeting with management convinced the Wall Street firm of the dating app's growth. "We come away from our BMBL [management] meetings increasingly confident in Bumble app's trajectory & longer-term positioning within the dating/relationship ecosystem," JPMorgan's Cory Carpenter wrote. JPMorgan raised its rating on Bumble to overweight from neutral. The firm maintained its price target of $55 on the stock, implying 65% upside from Bumble's closing price of $33.25 on Monday. Shares leaped 7.7% in premarket trading Tuesday. The firm is bullish on Bumble's app momentum, with management reporting strong daily active user and monthly active user growth. "Bumble app is growing users, payers, & payer penetration across virtually all geos, including the US," Carpenter said. JPMorgan expects this expansion to continue next year as the app focuses more on the pre-match experience and monetizing users through lower-end tiers like college bundles. Plus, the firm likes the app's Bumble BFF product, which focuses on platonic relationships. The company is planning to relaunch Bumble BFF to function around building communities around shared interests. "The BFF product has remained largely unchanged since its 2016 launch, with Bumble making very little investment & the BFF mode buried within the app settings. We have historically been skeptical on BFF, but we are warming up to it & we like the vision of the revamped product," Carpenter said. JPMorgan has historically preferred to gain exposure to the online dating space through Match Group , which owns services like Tinder, Match.com and OkCupid. However, JPMorgan said its "preference shifts to BMBL in the near term" as Bumble shares are trading at relatively cheap levels compared with Match Group. Bumble made its public debut in February and began trading at $76 per share, more than double its current price. The stock is down more than 33% this quarter. —CNBC's Michael Bloom contributed reporting.

A display in Times Square is pictured as dating app operator Bumble Inc. (BMBL) made its debut on the Nasdaq stock exchange during the company's IPO in New York City, New York, U.S., February 11, 2021.

Mike Segar | Reuters

JPMorgan upgraded shares of Bumble on Tuesday after a recent meeting with management convinced the Wall Street firm of the dating app's growth.

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