Bumble ( NASDAQ: BMBL ) shares fell on Monday as investment firm Jefferies downgraded the online dating company, noting an unfavorable risk-reward at these levels.
Analyst Brent Thill lowered his rating on Bumble ( BMBL ) to hold from buy, but raised the price target to $39 from $30, noting that shares are now trading at 26 times 2023 EBITDA estimates.
"While our [third-party] data checks show an acceleration in Q2 [revenue] and downloads for the Bumble App we still see several reasons to be cautious at current levels," Thill wrote in a note to clients.
The analyst added that the Bumble App is "fully lapping" the two-tier pricing, which saw a "massive uptick" in average revenue per user in the third-quarter of 2021 at 16% year-over-year growth. Additionally, Thill is "skeptical" that Bumble ( BMBL ) can reach Match Group's ( NASDAQ: MTCH ) level of EBITDA margins any time soon, noting its progress has not been "particularly impressive."
Lastly, Bumble ( BMBL ) is significantly more expensive than Match Group ( MTCH ), trading at 26 times 2023 EBITDA, whereas Match trades at 18 times.
Both Bumble ( BMBL ) and Match ( MTCH ) shares fell nearly 1.5% in premarket trading to $37.40 and $72.32, respectively.
Going into Match's ( MTCH ) second-quarter results, Thill noted that foreign exchange headwinds are "worsening," and revenue is likely to come in below the guidance of $800M-$810M.
And although Match's ( MTCH ) stock is currently trading at a near three-year low with 18 times EBITDA, any upside is not being considered from the launch of Tinder Coin and an international expansion of Hinge.
Tinder likely grew revenue 16% year-over-year, while Hinge grew 50% year-over-year, though Azar is still forecast to decline year-over-year, Thill estimated.
"At just 18x FY23 EBITDA, [Match] stock is trading at its lowest multiple since March 20 and a 35% discount to [Bumble]," Thill explained, adding it has a "favorable 3-to-1 risk-reward profile with a floor at 15x FY23 EBITDA ($50/share)."
Last month, J.P. Morgan lowered its estimates on online dating stocks including Bumble ( BMBL ) and Match ( MTCH ), noting that foreign exchange and macro headwinds are likely to impact them in a similar manner to larger Internet companies .
Analysts are largely cautious on Bumble ( BMBL ). It had an average rating of BUY from Seeking Alpha authors , while Wall Street analysts rate it a HOLD . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates BMBL a HOLD .
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Bumble falls as Jefferies downgrades on unfavorable risk-reward, favors Match into Q2