DATING app Bumble has seen share prices soar as investors fall in love with the dating app just ahead of Valentine’s Day.
The company, which was launched in 2014, began selling shares publicly through the NASDAQ stock exchange in New York City on Thursday.
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After the first day of trading, the company was valued at more than $9.4bn ($13 bn), according to the BBC.
The Wall Street success has reportedly made 31-year-old CEO and founder Whitney Wolfe Herd one of the world’s few self-made female billionaires.
She’s also become the youngest woman ever to take a company public.
Similar to Tinder, Bumble lets users swipe right on someone they’re interested in and left on someone they’re not.
What are the risks of investing?
FOR some, investing can be a moneymaker with great returns, but it’s not without its risks.
At its worst, you could lose everything you put in.
Here, we take you through some of the things you need to consider before parting with your cash:
- Investing is essentially gambling so there are inherent risks attached to investing your money in the stock market.
- There are no guarantees that you will see what you pay in go up and plenty of people have lost a lot of money betting on shares.
- Highs don’t last forever and short squeezes can quickly see prices fall to their previous levels.
- It is extremely dangerous to invest money you cannot afford to lose.
- Proceed with caution, use common sense and always do your research.
But there is one key difference – the app aims to empower women who have to make the first move to start a conversation after making a match.
Since 2014, the app has expanded with Bumble BFF, a feature to link up new friends, and Bumble Bizz, a professional networking service.
Here we explain who owns Bumble, why the share price is going up and how to invest.
A word of warning though – investing is not a guaranteed way to make money, so make sure you know the risks and can afford to lose the money.
Who owns Bumble?
Bumble, which is based in Austin, Texas, was started up in 2014 by Wolfe Herd, one of the founding members of rival app Tinder.
At the time, dating app company Badoo’s founder Andrey Andreev made an initial investment of £7.2m ($10m) in Bumble.
He became the majority owner of the company with a 79% stake while Wolfe Herd became CEO with a 20% stake, according to Forbes’ Clare O’Connor.
But in 2019, Andreev sold his entire stake in MagicLab – the umbrella company that owned Badoo and Bumble – to the Blackstone Group with the deal valuing MagicLab at £2.1bn ($3bn).
MagicLab was then renamed Bumble and Wolfe Herd was named CEO of the whole umbrella company.
As of Thursday, Bumble started selling millions of shares publicly on the Nasdaq stock exchange under the symbol “BMBL”.
This means a proportion of the company will now be owned by public shareholders.
Why is Bumble’s share price going up?
Bumble’s initial public offering (IPO) – the process when a private company first makes shares available to buy publicly – began this week, just ahead of Valentine’s Day on Sunday.
Before the shares went on sale, the company’s estimated value was $8.2bn and its initial public offering price for one share was £31 ($43).
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But share prices opened at £55 ($76) – jumping by around 70% from the $43 opening price – due to high demand as investors flocked to pick up the new stock.
This means Bumble is now worth more than £9.4bn ($13billion) – billions higher than the £6billion (£8.2billion) that it was initially floated at.
How to buy shares in Bumble
If you decide you want to invest in the dating app, you’ll need to join a trading platform if you are not already trading on one.
But be aware that the company is listed on the stock exchange NASDAQ in the US, meaning UK investors will need to complete a W-8BEN tax form to be able to trade in US stocks.
You will also have to bear in mind that your pounds will need to be converted into dollars in to order to buy and sell US shares at the current exchange rate.
This is an added risk as it could see you lose even more cash if the value of the pound drops against the dollar.
You should always compare share trading platforms yourself before signing up to one.
Some platforms may be offering special deals on shares when you first sign up.
For example, Stake is currently offering £28.30 ($39) of free Bumble stock to anyone who signs up to the platform before the end of February.
But remember Bumble shares have been trading at around £55 ($76) so you’ll have to fork out at least £26.70 ($37) of your own money if you want to buy your first share and the full £55 a piece from then on.
If you’re a beginner, look for a platform with low commissions, expert ratings and investment tools to track your portfolio.
You will then need to complete an application for the trading platform with your personal and financial details, like your ID and bank information.
Next you can find the stock by name or ticker symbol by searching “BMBL”.
What are the risks of investing in Bumble?
Before buying shares in any company, you should always research its history to determine whether it’s a solid investment.
Remember investing is essentially gambling and there are no guarantees that you will see what you pay in go up.
Any fall in share price means that you’ll likely make a loss.
Meanwhile, highs don’t last forever and often a short squeeze ends in prices dropping back to where they were before, although after how long varies.
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown said the Bumble as an investment propect is “full of promise” with it still being in the early stages of global expansion.
“The growth in paying users will be key and between them Bumble and Badoo had around 2.4 million paying users in September 2020,” she added.
Streeter also said that Bumble has chosen to launch before Valentine’s Day to capitalise on the romance buzz around the February 14th.
She also said that the company will be likely counting on a surge of people starting to date again when lockdowns ease.
But Streeter said that investors should “still exercise some caution about Bumble.”
She warned that the prices which have soared from the momentum on the first day may quickly drop so that investors could end up losing out.
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Bumble CEO Whitney Wolfe Herd explains how she started the first ‘female first’ dating app
