Bumble Inc. (NASDAQ:BMBL) shares traded higher Wednesday, and JPMorgan weighed in on the stock.
What To Know: In the note, the analyst was surprised by Bumble's 30% workforce reduction and even more so by the company's upward revision to its second-quarter revenue and adjusted EBITDA guidance.
Despite cutting $20 million in marketing spend, Bumble raised its revenue outlook to $244 million to $249 million, up from $235 million to $243 million previously.
The stronger outlook comes as a surprise given that Bumble app downloads are down more than 30% year-over-year. The analyst suggested the full revenue impact of lower marketing spend may still be delayed, as new users often take time to convert into paying subscribers.
Although the workforce cut was larger than expected, Bumble plans to reinvest most of the $40 million in expected annual savings into product and technology. The analyst noted that with Bumble now operating at a margin level similar to Match Group, there may be limited room for further cost-cutting.
Still, JPMorgan cautioned investors not to assume that the improved guidance signals a rebound in the online dating market. Tinder's monthly active users remain stagnant, and Bumble's download trends continue to decline.
BMBL Price Action: Bumble stock closed Wednesday 25.14% higher at $6.52, according to data from Benzinga Pro.
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