Bumble Investor doubts grow despite AI updates
Shares in dating app Bumble fell more than 6% in premarket trading on Thursday. The drop follows disappointing subscriber numbers and growing concerns about the company’s ability to boost spending during a period of slow AI innovation.
Bumble reported that its total number of paying users declined by 8.7% in the second quarter, dropping to 3.8 million. The decline highlights the broader challenges facing the online dating industry, including lower user engagement, rising inflation, and what some see as limited product innovation.
Industry feels pressure as rivals also struggle
Bumble’s main competitor, Match Group, has also faced pressure. The parent company of Tinder and Hinge reported a 5% fall in paying users. However, it exceeded revenue expectations, helped by the growth of Hinge and a renewed leadership focus.
Despite cautious outlooks, analysts at RBC Capital Markets noted that market sentiment in the dating app space is already low. “It may not yet be the darkest before the dawn,” they said, suggesting the possibility of future recovery.
In response to so-called “dating fatigue,” Bumble is now focusing on AI-driven features. These innovations aim to improve user experience and attract new subscribers. However, some investors remain unconvinced that AI alone can reverse the current trend.
Valuation and market outlook
So far this year, Bumble shares have lost about 6.2% of their value. The Austin-based company currently trades at 7.96 times its projected earnings for the next 12 months. In comparison, Match Group trades at 14.64 times, reflecting stronger market confidence in its outlook.
As the sector looks to technology for growth, Bumble’s success may depend on how quickly it can turn innovation into improved engagement and revenue.
with inputs from Reuters
