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With the end of the COVID-19 crisis, the narrative for dating and relationship-centric businesses like Bumble (BMBL) should be incredibly positive. When the SARS-CoV-2 virus still represented a mysterious and dreadful public health threat, the idea of meeting up with complete strangers – let alone engaging in closer relations – was anathema to plain old common sense. Thus, the early 2021 initial public offering of BMBL stock was fortuitously timed, to say the least.
About the only positive from the debut was that following the first day of public trading, BMBL stock reached $76. From then on, though, the market value cratered. In May 2021, BMBL slipped below its initial offering price of $43. After a concerted effort by the bulls to elevate demand, the stock slipped sharply in early November. From then on, it has yet to claw back to its initial offer.
Understandably, COVID fears along with mobility restrictions hampered Bumble and other dating apps throughout 2021 and for much of 2022. Still, with relatively few people concerned about infection risks this year, the present juncture offers an ideal chance to make up lost ground. Indeed, BMBL stock did start the new year auspiciously.
Unfortunately, shares stumbled again. This time around, an economic pandemic may pose headaches for beleaguered Bumble shareholders.
Love Is Not in the Air for BMBL Stock
Since the beginning of this year, BMBL stock fell over 21%, reflecting a lack of resonance with the underlying enterprise’s core demographic: young, lonely singles. Not surprisingly, the COVID-19 pandemic sparked a severe loneliness crisis in the U.S. and likely other parts of the world. But with COVID fears fading in the rearview mirror, the dating app industry should theoretically rise.
So far, this narrative hasn’t panned out. For example, Bumble rival Match Group (MTCH) is down over 7% this year despite a strong performance of 10% up on Thursday. Overall, the dating and relationship sector itself doesn’t feel the love. And that may very well be due to the troubled consumer economy.
As CNN pointed out in late April of this year, engagement ring sales are down sharply. According to Signet Jewelers (SIG), several early relationships faded as government agencies mandated lockdowns. Following the draconian mitigation protocols, society incurred a dramatic decline in dating. Therefore, Signet believes this dynamic created an “engagement gap.”
To be sure, sealing the deal in marriage is a different proposition than meeting people for the first time. Still, the headwind for BMBL stock centers on the contributing factors associated with ring sale declines. Primarily, we’re dealing with economic obstacles that will likely negatively affect Bumble and the broader dating and relationship segment.
As the most recent data demonstrates, inflation remains stubbornly high, impacting consumer behaviors. In response, the Federal Reserve implemented an aggressively hawkish monetary policy to tame soaring prices. Of course, this decision gave way to much higher borrowing costs, imposing a deflationary effect on consumer sentiment.
Even specialists in wedding attire have reported that an increasing number of brides have opted for less traditional attire, including thrift wedding dresses. Put another way, love might be in the air but it’s coming at a cost – a cost that consumers are increasingly looking to shave.
Income Red Flags
Another worrying point about BMBL stock is the unrealistic shift in expectations and the subsequent attitude of entitlement that the pandemic fostered. Obviously, collective demands to keep work-from-home initiatives permanent represent arguably the most conspicuous example. However, such entitlement appears to have affected the dating scene as well.
A recent survey revealed that people making a salary below $30,000 is a red flag for many Americans. Granted, that’s practically poverty level if you’re living in a major metropolitan area like New York City. There, the hesitation is understandable. However, across the U.S., the real median household income is about $71,000.
Since we’re talking households, dividing this figure by two gives you a rough approximate of individual average income. And that’s surprisingly close to the red flag line for the above surveyed Americans.
Worse yet, with mass layoffs dominating business headlines this year and last, it may not be long before previously gainfully employed individuals also start getting desperate. Adding insult to injury, those seeking new employment will likely see their relational prospects diminish sharply because of the aforementioned elevated expectations for minimum salary.
Tellingly, the Barchart Technical Opinion indicator labels BMBL stock a 100% sell. Given that the industry itself appears troubled well before the point of sale, Bumble does not offer a great look, even for speculators.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
