Why Bumble is overvalued
Yesterday Bumble had it’s initial public offering (IPO). The starting price was 43 USD, a valuation of more than 8 billion and it shot up to 76 USD, a valuation of over 13 billion.
Despite this high valuation, the company lastly made a net loss and only a few hundred million ($376.6 million) in revenue.
The current market for Tech, EV and Cannabis stocks is in a hype bubble. I made profit with some overvalued stocks and currently sell these and rebalance my portfolio with more value stocks.
But this is not the only risk. I’ve used Dating Apps since multiple months (I also made a post about a problem with Tinder) and I think the market will evolve:
Enter the World of Facebook
Facebook launched its own Dating service: Facebook Dating
I think this will dominate the market in a few years — why?
- Nearly all popular Dating Apps use Facebook Data / Login for registration and validation of the user
- Facebook already has data like Profile Photos, Workplace, Interests,… which are important in the wold of online dating
- Facebook already has methods to validate profiles
- Facebook already has a bigger user base than all of the dating competition
- To me it seems like the user base of Facebook Dating is already bigger than the user base of Bumble in my local area
- I’ve encountered no limits in swipes or other things
- All features which are premium on the competition Apps are free on Facebook
- I’ve encountered no Ads in Facebook Dating
- I guess this depends on the individual, but I’ve got more matches in a few days on Facebook Dating than in multiple months on Bumble
- Facebook promotes social connections — you see who is Friends with other Facebook Friends of you on Facebook. This adds validation - you trust the other side more that it is not a fake profile
Why should users register with Facebook on Third-Party-Apps if Facebook already provides a superior Dating experience?
Currently, many people don’t know about Facebook Dating, but Facebook is a Advertising Platform with a giant user base — so it should be very easy to gain more and more people until the competition dies out.
It looks like the Investors in Bumble aren’t aware that this big competitor is out there and the IPO money was needed for Bumble to have a chance fighting them.
This is not investment advice or a buy/sell recommendation. This is my personal opinion and is for information and entertainment purposes only.
Everyone acts independently with their financial decision and bears responsibility for it themselves. Trading in securities is always subject to risks and can lead to total loss or debt (e.g. in the case of warrants). Liability is excluded.
Originally published at https://blog.m5e.de.