Jim Cramer recommends relationship app rivals Bumble and Match Group
After dating service Bumble made its market debut on Thursday, CNBC’s Jim Cramer compared its business performance to its main competitor, Match Group, and made recommendations on their stocks.
Bumble, which went public with a lot of fanfare on its first day to collect more than 63%, has incorporated the Europe-based Badoo dating site into its governing body. The Match Group, which was spun off from the media holding IAC last summer, has a larger portfolio that includes Tinder, Hinge and OkCupid, among others.
However, their businesses should serve different purposes for investors, Cramer said.
“They are both great companies. I think they will have huge numbers in the second half. They just fill different roles in your portfolio,” he told Mad Money.
Bumble, which was launched by Whitney Wolfe Herd in 2014, was priced at $ 43 before trading under the ticker symbol “BMBL”. At close of trading, the company had a market value of $ 13 billion with a share price of $ 70.31. Match Group had a market capitalization of $ 45.8 billion at close of trading.
Bumble is the faster breeder of the two competitors based on the numbers in its S-1 filing. In 2019, the company reported total revenue of $ 488.9 million, up nearly 36% from $ 360.1 million in 2018. For the pandemic-ridden 2020, Bumble reported in the first nine months to Total revenue of $ 416.6 million as of September 30th, of which $ 40 million was generated between January 1st and January 28th.
Compared to the same nine months in 2019 when total sales were $ 362.6 million, Bumble grew its business 15% amid the pandemic.
At Match Group, the company had total revenue of $ 2.4 billion for full year 2020, up 17% from 2019. Sales increased 19% in 2019 compared to 2018, according to Cramer.
“If you’re a growth investor, Bumble is the way to go,” said Cramer. “Even after today’s incredible run, it’s the superior growth stock.”
Bumble has a much shorter range than Match. In its prospectus, Bumble said it had an average of 42 million monthly users for the third quarter and 2.4 million paying users as of September last year.
Match said it had nearly 11 million average subscribers in the fourth quarter of 2020, up 12% year over year.
Bumble and Match executives hope to continue expanding their online dating business using the earlier building products for platonic matchmaking and networking services.
A key difference between the companies is that Match is profitable while Bumble is still a money-losing company with margins improving, Cramer pointed out.
“If you have a more cautious approach to the market and still want an online dating stock, Match is the way to go,” said Cramer.
Match stocks, which closed on Thursday at a record $ 172.13, are trading at 16 times this year’s sales estimates. That valuation was way too cheap for a 17% growth company, according to Cramer.
Based on FactSet estimates, Match is forecasting revenue of $ 2.8 billion this year and $ 3.31 billion in 2022.
“People pay [for Match] because they expect the numbers to explode as soon as we reopen, “Cramer said.
Bumble sells for 17x sales, he added. According to FactSet figures, the company will post full year 2020 revenues of $ 580 million, $ 723 million this year, and $ 897 million in 2022.
“In other words, they look very similar in terms of price to sales, even though Bumble is growing twice as fast as Match,” he said.