Bumble stock has had a $14.7B wipeout: will it rally after earnings?

Bumble stock price has fallen from grace. BMBL dropped to $2.96 today, March 10, down substantially from the all-time high of $85.

This retreat has brought its market capitalisation from nearly $15 billion to $337 million. So, is it safe to buy Bumble ahead of its earnings?

Bumble to publish its earnings today 

The BMBL share price has plunged sharply as investors turned highly bearish on most dating companies. 

For example, Match Group, the parent company of Tinder, Hinge, OkCupid, and Meetic, has plunged from $178 to $31 today.

Similarly, Grindr stock has dropped from last year's high of $25 to the current $12.

Bumble stock price will be in the spotlight as it releases its financial results on Tuesday, which will provide more information about its business.

The most recent financial results showed that its revenue dropped by 10% in the third quarter as the monetisation challenges continued.

Essentially, there are concerns that most people are no longer interested in paying for dating services.

The revenue dropped to $246 million, with the Bumble App falling by 10% to $198 million. Badoo’s revenue dropped by 11% to over $47 million.

The company also experienced a sharp decline in the number of active users. Its paying users dropped by 16% to 3.6 million, a trend that may continue in the foreseeable future.

Wall Street analysts believe that Bumble’s financial results will point to more weakness in the fourth quarter.

The average estimate is that its revenue dropped by 15% in the fourth quarter to over $221 million.

Based on the last financial results, there is a possibility that its revenue and profits will be lower than expected.

Bumble’s earnings-per-share (EPS) are expected to come in at 21 cents, much lower 30 cents.

If these estimates are correct, the annual revenue will come in at $962 million, down by 10% YoY.

The weakness is expected to continue in the foreseeable future.

For example, the average estimate is that its 2026 revenue will come in at $851 million, down by 11% YoY.

The earnings per share are expected to drop from $1.73 to $0.74.

The dating industry is expected to keep slowing in the coming years, which will impact its revenue and profits over time.

On the positive side, Bumble is still a solid brand with millions of users from around the world.

The company will likely continue cutting costs and even become an acquisition target, especially from private equity companies as it has become a bargain trading at 1.77x forward earnings.

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Bumble stock price technical analysis 

The daily timeframe chart shows that the BMBL share price has crashed in the past few months.

It has dropped from a high of $8.63 in July last year to the current $2.75.

A closer look shows that its stock has formed a down-gap in the last two earnings.

For example, it dropped from $7.6 to $5.80 when it published its financial results in August last year. 

Also, the stock dropped from $5.4 to $4 when it released its results in November last year.

The stock has remained below all moving averages and is hovering near its all-time low.

Therefore, while the long-term outlook is bearish, there is a likelihood that it will rebound as its short-squeeze as the company has a short interest of 13%.