Why Bumble Stock Skyrocketed Today

The Motley Fool · 1d ago

Key Points

  • Bumble agreed to be taken private.

  • The beleaguered app platform is struggling to adapt to shifting dating trends.

Shares of Bumble (NASDAQ:BMBL) surged more than 56% on Tuesday after the dating app maker struck a deal to be acquired by technology and media investment firm Ithaca Holdings for $1.3 billion.

A person is using on a dating app.

Image source: Getty Images.

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An enticing offer for Bumble's shareholders

Under the terms of the deal, investors will receive $6.05 in cash for every share of Bumble they own. That's a 138% premium over the stock's closing price on Friday.

Following the closing of the acquisition, Bumble will operate as a privately held company with Ithaca's Co-CEOs, Ravi Gupta and John Hegeman, overseeing its operations.

Bumble founder and CEO Whitney Wolfe Herd said she will also "remain actively involved with Bumble."

"In Ithaca, we have found a partner who shares our vision, believes in our women-first mission, and is committed to investing in Bumble's future," Herd said.

Herd launched Bumble in 2014 with the goal of building a safer place for women to find love. Its dating app was unique in that it was built around women initiating conversations with matches. But Bumble was forced to abandon that approach earlier this year in an attempt to attract more users and boost engagement.

Bumble's growth has stagnated in recent years as younger people have moved away from online dating platforms. The company's revenue fell 15.2% year over year to $210.5 million in the second quarter, driven by a 16.4% decline in total paying users to 3.2 million.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.