After meeting service Bumble made its market debut on Thursday, CNBC’s Jim Cramer compared his business performance to that of his biggest competitor, Match Group, and offered his recommendations on their shares.
Bumble, which started publishing with much fanfare on its first day to garner more than 63%, includes the Europe-based Badoo dating site in its umbrella. Match Group, which was divested by media holding company IAC last summer, has a larger portfolio that includes Tinder, Hinge and OkCupid, among others.
However, their businesses must serve different purposes for investors, Cramer said.
“They are both great companies. I think they will have a huge number in the second half. They just play different roles in your portfolio,” he said on ‘Mad Money’.
Launched in 2014 by Whitney Wolfe Herd, Bumble was priced at $ 43 before trading under the “BMBL” symbol. It held a market value of $ 13 billion at the end with a share price of $ 70.31. Match Group eventually ordered a market capitalization of $ 45.8 billion.
Bumble is the faster producer of the two competitors, based on figures in its S-1 submission. In 2019, the company said total revenue was $ 488.9 million, almost 36% higher than $ 360.1 million in 2018. As for the pandemic-stricken year 2020, Bumble had total revenue of $ 416.6 million reported during the first nine months to September 30, $ 40 of which million was generated between January 1 and 28.
Compared to the same nine months in 2019, when total revenue was $ 362.6 million, Bumble grew its business by 15% amid the pandemic.
As for Match Group, the company showed a total revenue of 2020 for $ 2.4 billion, which increased by 17% from 2019. Its revenue rose 19% in 2018 by 2019, according to Cramer.
“If you’re a growth-based investor, Bumble is the right way,” Cramer said. “Even after today’s incredible run, it’s the excellent growth rate.”
Bumble achieved a much smaller reach than Match. In its prospectus, Bumble said it had 42 million monthly average users in the third quarter and 2.4 million paying users through September last year.
Match had nearly 11 million average subscribers in the fourth quarter of 2020, representing a 12% year-over-year improvement.
Managers of Bumble and Match hope to continue expanding their online dating business, with the former building products for platonic matchmaking and networking services.
A major difference between the businesses is that Match is profitable, while Bumble is still a money-loss business with margins improving, Cramer stressed.
“If you have a more cautious approach to the market and you still want an online shipping stock, Match is the right way to go,” Cramer said.
Match shares, which closed at a record $ 172.13 on Thursday, are trading at 16 times this year’s selling prices, a valuation that, according to Cramer, is far too cheap for a company with 17% growth.
Based on FactSet estimates, Match is expected to deliver $ 2.8 billion and $ 3.31 billion in 2022 this year.
‘People pay [for Match] because they expect the numbers to explode as soon as we reopen, ‘Cramer said.
Bumble sells 17 times more, he added. According to FactSet, the forecast for annual sales is $ 580 million, $ 723 million in the current year and $ 897 million in 2022 in 2022.
“In other words, they look very similar on a price-to-sell basis, even though Bumble is growing twice as fast as Match,” he said.