The IPO frenzy is not letting up, Bumble informed the world this morning.
Per a new SEC filing, the dating company raised its target IPO price range, indicating that its previous attempt to quantify its per-share value was an undershoot. This means we’ll need to calculate a host of new valuations and revenue multiples for the company.
But more than that, we have a question to answer: Is Bumble aiming for a Match.com price, despite not being as profitable as its already-public rival? The last time we covered the pair, Bumble’s implied revenue multiples were discounted compared to Match, but with this new price, has the smaller company gained ground?
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And if so, does it mean that we’re seeing more public market enthusiasm for private companies? We’ll find out.
When it comes to the frenetic demand for IPO shares from public investors, I am reminded of a particular Dilbert. In this particular strip, Wally gets fired and is then hired back as a consultant. People outside the company appear smarter, he said, so he’s now back and getting paid more money than before.
This, but for private companies going public. Some companies appear to have huge promise while private, only to fizzle slowly while public. Or they manage huge price gains during their IPO process, only to cede those wins after they have a few trading months under their belt.
Is that what’s going to happen with Bumble?
Bumble’s new IPO pricing range
Bumble targeted a $28 to $30 per-share IPO price when it first set a range, implying a greater than $1 billion raise. Now the company is selling more shares at an even higher price. From 34.5 million shares to 45 million, and at a new $37 to $39 per share price range, Bumble could raise $1.66 billion to $1.76 billion in its IPO.
And that’s not counting its underwriters’ option of 6.75 million shares, which might bring its total raise to $2.02 billion at the top end of its new pricing interval.
What is Bumble worth at those new prices? Using its simple, shares-outstanding post-IPO count of 112,745,301 — inclusive of its underwriters’ option — the company would be worth $4.17 billion to $4.4 billion.
But if we count instead “Class A common stock outstanding after this offering assuming exchange of all Common Units held by the Pre-IPO Common Unitholders,” then its share count rises to 185,140,267. That brings Bumble’s valuation to $6.85 billion to $7.22 billion.
Toss in the last 15,197,194 shares that we’ll count — they are marked “will be granted” instead of “may be granted” in the filing — we wind up with 200,337,461 shares. That’s a max valuation of $7.41 billion to $7.81 billion for Bumble, up from $5.73 billion and $6.14 billion at its first IPO pricing interval and then-current share count.
So, what is that worth in multiple terms? Our prior work regarding a full-year 2020 revenue result is still current, it appears, which means we’ll use $580.5 million as our top-line figure for now. At that price, Bumble is worth 12.8x to 13.5x its 2020 revenues at its current IPO price interval, and its fully diluted valuation.
But full-year results are always conservative. Let’s try to get a run-rate figure for a more recent quarter.
While we lack Q4 2020 numbers for Bumble, we do know that the company’s Q3 2020 revenue — successor results, page 129 — was $162.3 million (+24% from its predecessor results in Q3 2019). So let’s quadruple that to get a run rate for the company as close as we can: $649.2 million.
That’s a bit higher than our previous, full-year number. And it lowers Bumble’s multiples to 11.4x and 12x.
Bumble had negative operating income and net income in the third quarter, albeit with positive adjusted EBITDA and some cash generation. So is Bumble expensive at that price? Let’s turn to Match for a comp.
Since we last worked on Bumble’s IPO, Match reported it own Q4 results. Here’s the latest:
- Revenue of $651.4 million (+19% YoY).
- Operating income: $212.6 million (+17% YoY).
- Net income: $140.6 million (+49% YoY).
And various large quantities of adjusted EBITDA and cash generation.
Match had a Q4 run rate of $2.61 billion and a valuation of $43.1 billion. That’s a multiple of 16.5x. (Match shares fell after its earnings report but appreciated from around $138 on February to $162 as of last Friday; the company reported its earnings on February 2. Analyst notes helped boost its value back up after missing on per-share profits in the quarter.)
So it appears that Bumble’s run rate multiple is lower by around 5x, with a faster growth rate tempered by unprofitability to Match’s slower growth rate and far-greater profitability. You can see why Bumble is worth less per-dollar of revenue than Match.
But here’s the thing, the math didn’t quite shake out like I expected. Match’s revenue multiple expanded since our last chat — great news for the smaller company looking to go public with a singular comp — so while Bumble’s own multiples are now higher as well, thanks to its new IPO price range, Match has kept pace.
Instead of Bumble looking more expensive compared to its more profitable, public competitor, it now appears about as discounted as before. Perhaps Bumble could price above this new range thanks to Match’s recent repricing?
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