Dennis Hammer is a writer and finance nerd with six years of investing experience. He writes about personal finance for Wealthsimple. Dennis also manages his own investment portfolio and has funded several businesses in the past. Dennis holds a Bachelor's degree from the University of Connecticut.
Popular dating app Bumble recently had an IPO or initial public offering. You might be wondering if this company belongs in your portfolio. In this article, we’ll help you understand what Bumble is, why people like it, and how to buy shares.Get started with Wealthsimple Trade. Sign up today and start building your portfolio.
What is Bumble?
Bumble is the company that owns a popular dating app by the same name. It’s a free app that connects people looking for romantic connection, but it also offers in-app purchases and subscription offerings. It also draws revenue from advertising and sponsorships.
Unlike its competitors, Bumble uses a “women go first” model. Women must initiate the first conversation for heterosexual matches. As of September, 2020, the company claims to have 12.3 million monthly active users. It is focusing on converting more of its user base to paid customers.
Founder Whitney Wolfe Herd is the youngest female founder to take a U.S. company public. She joins a very small list of female IPO leaders.
What is Bumble’s current market cap?
As of June, 2021, Bumble’s market cap is $8.625 billion. Market cap refers to the total dollar value of a company’s outstanding shares, including all the shares owned by stockholders, company officials, and public investors. We use this metric to gauge the value of a stock.
When is the Bumble IPO Taking Place?
Bumble’s IPO took place on February 11, 2021. This is when 50 million shares became available for open trading on the Nasdaq to the general public under the ticker symbol BMBL. Bumble priced its shares at $43, but the stock traded up to $76 by the end of the day.
In it’s S-1 filing (a key part of the IPO process), Bumble says it generated $376.6 million of revenue in the first nine months of 2020, with a net loss of $84.1 million.
Why are people interested in buying Bumble shares?
Even though Bumble exists in a competitive industry, investors like its unique approach to facilitating connections (the “women go first” model). This distinguishes it from Match Group, which owns popular dating apps Hinge and Tinder. That said, online dating is not a “winner-take-all” market. Many online daters use multiple apps at the same time.
Furthermore, investors like Bumble because online dating apps are becoming a way of life for many people, especially Millennials and Generation Z. Online relationships are becoming more and more common. The market is expected to grow considerably.
How can I buy shares of Bumble?
Now that Bumble’s IPO has happened, shares of the company are available for purchase. Here’s a basic overview of how to buy shares of Bumble.
Step 1: Open a brokerage account
Your first step is to open a trading account with a broker. A broker is a financial institution that executes trades on behalf of retail investors. You can’t trade stocks without one. If you already have an account with a brokerage, you can probably use it to purchase shares of Bumble.
If you don’t have a trading account yet, we recommend finding one that meets these qualifications:
Low commissions and fees. If there are fees, make sure you understand what they are.
A simple and easy to use trading platform. You want something that doesn’t overwhelm you with information and allows you to make trades painlessly.
Access to other securities and financial products in case you decide to invest in them someday.
Part of opening a brokerage account includes depositing funds for trading. Your broker will require this during the onboarding process.
Step 2: Decide how many shares you want
Once you’ve opened your brokerage account, you’ll need to decide how many shares of Bumble you’d like to purchase. Fortunately, this is easy to calculate. Simply divide the total amount of money you want to invest by the price of each share.
For instance, if the price is $40 a share and you’re willing to invest $6,000, you can purchase 150 shares ($6,000 / $40 = 150).
A word of warning: Even though you hope Bumble’s price will rise, there’s always the possibility that it falls. Investing always comes with some risk. We strongly recommend diversifying your portfolio with different kinds of securities to reduce the risk of losing everything. Never invest more money than you can afford to lose.
3: Choose your order type
Your next step is to choose the type of order you’ll execute. You basically have two options here: market order or limit order. The order type can affect how much you’ll pay for each share.
Market orders: This is an order to trade the stock at the current price when the order reaches the exchange. You’ll pay whatever the price is when the order is executed, which might be different from your order price (though a popular stock like Bumble will probably trade at a price close to your order price).
For example, if you place a market order while Bumble is $38, you’ll likely pay something close to $38 (with some slight fluctuation).
Limit order: A limit order is an order to buy or sell a security at a specific price. You have absolute control over how much you spend, but it may take some time to execute your trade. Purchase limit orders executed at the limit price or lower. Sales limit orders are executed at the limit price or higher.
For example, let’s say Bumble is currently $38 a share and you place a limit order to purchase shares at $35 a share. Your order will only be fulfilled when the price falls to $35 or less.
Step 4: Execute the trade
Now that you’ve chosen how many shares you’ll buy and how you’ll order them, the last step is to execute your order. At this point, the broker will handle everything else. They will deduct the funds from your account and deposit the shares. If your broker can’t fulfill the order that day, it may cancel the order when the markets close or leave it open indefinitely. Check your account preferences to learn how you broker handles these situations
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