Bumble swipes right on $1.3 billion go-private deal amid online dating industry reset

Bumble is on track to go private in a $1.3 billion deal with Ithaca Holdings, following years of efforts to boost its growth. The online dating industry has been hit by a decline in users and changing habits among younger generations, particularly Gen Z. Bumble's share price jumped 56% to $5.95 in early trading on Tuesday, following a 50% surge on Monday after news of the Ithaca deal broke.

Rival Match, which owns Tinder and Hinge, has outperformed Bumble with its diverse portfolio of apps and international growth. Match's Hinge app has gained share among users seeking more serious relationships, as the niche Bumble once held has diminished. Bumble's management, brand, and strategies have not yielded the desired results, says TMT Research Analyst Chandler Willison.

Ithaca co-founders Ravi Gupta and John Hegeman will take on the roles of co-CEOs following the acquisition. Bumble offered $6.05 per share for the company, a 122.4% premium to its June 24 closing price, which was a day before the deal was reported by Reuters. Since its founding in 2014 by Whitney Wolfe Herd, Bumble has pioneered the "women-first" approach to online dating.

However, the company abandoned this feature this year in an attempt to improve user retention. Under Herd's leadership, Bumble has attempted various tactics, including raising prices, extending reply windows, incorporating AI tools for message crafting, and exploring offline events. The introduction of an AI matchmaking assistant in response to user fatigue from traditional swiping has also been unsuccessful.

Despite these efforts, Bumble's user base has dwindled, with total paying users dropping 16.4% to 3.2 million in the second quarter. Quarterly revenue has been declining for nearly two years, and the company's market value has plummeted to approximately $582 million, a stark contrast to its $14 billion valuation when it went public in 2021.

Blackstone, which holds about 14% of Bumble's shares, and Herd provided necessary shareholder approval for the deal.