Online dating. Picture: ISTOCK
Online dating. Picture: ISTOCK

New York — The next online dating company to go public probably won’t be cheap, but might need to reach some middle-ground with investors on its valuation, according to an analyst and a portfolio manager.

An initial public offering (IPO) in Bumble could value the millennial-focused courtship app as low as $1.1bn, below the $1.5bn figure it was reportedly seeking in January, according to calculations by Synovus Trust senior portfolio manager Dan Morgan.

Billionaire Andrey Andreev, majority holder of Bumble’s parent company, is talking to banks including JPMorgan Chase about a possible Nasdaq listing, he said in October.

In the absence of any public filings to provide insight into the company’s financials, Morgan used the average price-sales multiples of three peer companies: Spark Networks, Meet Group  and Match Group. Match operates a portfolio of online dating companies such as OkCupid, PlentyOfFish, and Tinder — perhaps the most similar to Bumble. Both are targeted towards millennials in urban areas.

Morgan applied the average multiple to an estimated 2019 revenue of $283m to get a $1.1bn IPO valuation, though said it could increase on Bumble’s plan to launch advertising in 2019.

’At this point, you’re just looking at people paying for subscription fees,’ he said in a phone interview. ‘Whereas when you start monetising 41-million users, the numbers can get a lot more interesting.’

Bloomberg Intelligence analyst Sean Handrahan expects a public valuation of $1.1bn to $1.5bn-plus, excluding any discount for IPO investors. He cited a discounted free cash flow model and price-multiple analysis, assuming 2019 revenue of $283m from a developed market base of 62-million potential users. He said two other factors that could boost the valuation above the $1.5bn level are expansion into international markets and profitability in the company’s networking and friends vertical.

A spokesperson for Bumble declined to comment and a spokesperson for Andreev, the majority shareholder of Bumble owner Rimberg International, did not immediately respond to request for comment.

Despite the promising catalysts in 2019, Bumble and Tinder both face a possible threat from Facebook. The social media giant has already begun testing its in-app dating features with its Colombian users and plans to launch in the US at an unspecified date. Investors will be watching to see how successful it is at stealing away market share.