Will Match Group Acquire Bumble for One Billion?

Match Group
  • Friday, December 01 2017 @ 02:00 pm
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Market analysts have a fascination with Tinder and Bumble, the two fastest-growing dating apps in the online dating industry. Rumors have been persistent that Match Group and Tinder was interested in acquiring the female-friendly dating app for around $450 million as reported back in August of this year, but the company turned down the offer.

Now it seems that Match Group, the parent company of Tinder, is reportedly still in talks to acquire Bumble, but now for a much heftier price tag of one billion US dollars, according to a recent article in Forbes.

Currently, Match Group has only $500 million in cash and a market cap of under $8 billion, according to website TechCrunch. So potential options would be to fund Bumble with some debt, or to do a cash/ stock combination deal, or even to acquire a portion of the company rather than all of it.

Bumble is an attractive target for Tinder. It has not only grown to over 23 million registered users in under three years, but its focus on improving the online dating experience specifically for females hits a pain point for Tinder, which has tried to distance itself from its “hookup” reputation.

Bumble has also ventured beyond the online dating industry, offering a competitive service to LinkedIn where users can successfully network for job opportunities, to find mentors in a particular industry, or to hire new employees, again with a female-friendly slant.

Tinder and Bumble have a rocky history, to say the least. Whitney Wolfe, who founded Bumble, was one of the co-founders of Tinder. She brought a lawsuit against her ex-boyfriend and fellow Tinder co-founder Justin Matteen, citing sexual harassment and sexual discrimination, which resulted in a hefty settlement for Wolfe.

So is it far-fetched to think the two apps could unite? Analysts don’t think so.

According to an article in Barron’s, Tinder makes most of its money from ad buys, thanks to its relatively unobtrusive ad technology, whereas Bumble generates most of its revenue from paid features and memberships. They would compliment each other, revenue-wise.

Piper Jaffray analyst Sam Kemp told Barron’s that the billion-dollar acquisition “makes financial and strategic sense” for Match, even though it’s more than double the original offer. “Bumble benefits from the same structural advantages as Tinder, namely that user acquisition relies very little on marketing spend.” Plus, getting more users to sign up for the paid version of the service incurs relatively little cost for both apps.

Analysts will keep a close eye to see if the deal goes through, and to see how the acquisition might shape the online dating industry.