Bumble (BMBL) shares surged as high as 26% on Wednesday after the dating app company announced plans to cut about 30% of its workforce, or roughly 240 positions. The layoffs, which were disclosed in a securities filing, are expected to result in charges of $13 million to $18 million during the third and fourth quarters of this year. However, management believes that the move will generate approximately $40 million in annual savings, which the company plans to reinvest in product and technology innovation.
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A spokesperson for Bumble emphasized that the decision to reduce staff was “not made lightly,” but said it was necessary to strengthen the company’s core operations and position it for future growth. The restructuring hopes to streamline the company’s operating structure and improve its ability to execute key strategic priorities. While painful in the short term, the company hopes that these steps will lead to long-term gains in both efficiency and product development.
Indeed, Bumble also provided an updated financial outlook where it raised its second-quarter revenue forecast to between $244 million and $249 million, and its adjusted EBITDA to between $88 million and $93 million. However, it is worth noting that the workforce reduction comes as Bumble attempts to reverse a steep decline in its stock performance since going public in 2021. Once valued at $7.7 billion, the company’s market cap had fallen to around $538 million as of Tuesday’s close.
Is BMBL Stock a Good Buy?
Turning to Wall Street, analysts have a Hold consensus rating on BMBL stock based on two Buys, eight Holds, and two Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average BMBL price target of $5.48 per share implies 10.6% downside risk.
