KeyBanc Downgrades Bumble to “Sector Weight”

Shares of Bumble Inc (NASDAQ: BMBL) experienced a decline in premarket trading on Friday after analysts at KeyBanc lowered their rating from “Overweight” to “Sector Weight.”

The stock had previously seen a sharp drop in August following Bumble’s revision of its annual revenue forecast, raising concerns about the company’s future growth prospects.

Investors expressed particular apprehension regarding the company’s revamped app and new features such as “Opening Moves,” which allows women to pose an initial question that all potential matches can address.

Bumble now anticipates full-year revenue growth of 1% to 2%, a significant decrease from earlier projections of 8% to 11%. For the third quarter, sales are expected to be between $269 million and $275 million, falling short of the analysts’ estimate of $296.1 million. The company’s second-quarter revenue also did not meet Wall Street expectations.

In a call following the earnings report, Chief Executive Lidiane Jones acknowledged that while the changes to the app might deter some users in the short term, the company is confident that these adjustments will lead to a more genuine and improved experience over time.

Furthermore, Bumble announced it would be slowing some monetization initiatives, including the expansion of its Premium+ offering in the latter half of the year.

KeyBanc analysts remarked that the app relaunch and the “Opening Moves” feature particularly undermine Bumble’s unique selling proposition, which has historically allowed women to initiate conversations after matching. This shift, they believe, makes Bumble more competitive with other dating brands.

They also noted that while there are immediate challenges to user engagement, these may be temporary rather than indicative of deeper structural problems. If user engagement issues prove to be transient and users adapt positively to the changes, the analysts suggested there could be potential for future growth.