KeyBanc Capital Markets analyst Justin Patterson downgraded Bumble Inc. (BMBL) to Sector Weight from Overweight.

Patterson warns that app store data indicators remain weak, suggesting that the app refresh may have compromised Bumble's key differentiator, and there are increased risks to the company's financial outlook for 2025.

With Bumble shares trading at approximately 5x the estimated EV/EBITDA for 2025, the analyst suggests there may be acquisition interest.

While Match Group (NASDAQ:MTCH) would be the obvious buyer, regulatory challenges could arise due to the degree of industry consolidation implied, the analyst notes.

Bumble's new Opening Moves feature enables women to choose a question that prompts other users to initiate the conversation.

According to Patterson, this change disrupts Bumble's unique approach of having women make the first move after a match.

The analyst writes that this makes Bumble more competitive with other brands.

Also Read: Bumble Bets On AI Tools To Revive Growth In Online Dating Market

On the negative side, Patterson underscores that Bumble's challenges are not "quick fixes" and forecasts that it will take time for the company to stabilize the business.

Although the analyst had cautioned investors about an earnings reset before the second-quarter results, the extent of the revision turned out to be more significant than anticipated, with revenue for the second half of the year expected to decline year-over-year.

For FY24, the analyst sees the company reporting revenues of $1.067 billion.

Price Action: BUMBL shares are trading lower by 0.68% to $6.43 at the last check Friday.

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