Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

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<p>On 9 February, it was announced that <a href="https://www.smartkarma.com/entities/match-group-inc" target="_blank" data-smartkarma-citation="entities:25903:1" rel="noopener">Match Group Inc (MTCH US)</a> has agreed to acquire <a href="https://www.reuters.com/article/hyperconnect-ma-match-grp/update-1-match-group-to-buy-s-korean-social-media-firm-hyperconnect-for-1-73-bln-idUSL4N2KF4T1" target="_blank" rel="noopener">Hyperconnect</a> for $1.7 billion. Match Group is the biggest global player in the online dating industry and the biggest competitor to <a href="https://www.smartkarma.com/entities/bumble-inc" target="_blank" data-smartkarma-citation="entities:31309:1" rel="noopener">Bumble (BMBL US)</a> which is getting ready to complete its IPO this week. <a href="https://www.reuters.com/article/hyperconnect-ma-match-grp/update-1-match-group-to-buy-s-korean-social-media-firm-hyperconnect-for-1-73-bln-idUSL4N2KF4T1" target="_blank" rel="noopener">Reuters</a> has mentioned that Hyperconnect reported revenue of more than $200 million in 2020 and it was profitable last year. With the valuation of $1.7 billion, this would suggest a P/S multiple of 8.6x.</p>
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On 9 February, it was announced that Match Group Inc (MTCH US) has agreed to acquire Hyperconnect for $1.7 billion. Match Group is the biggest global player in the online dating industry and the biggest competitor to Bumble (BMBL US) which is getting ready to complete its IPO this week. Reuters has mentioned that Hyperconnect reported revenue of more than $200 million in 2020 and it was profitable last year. With the valuation of $1.7 billion, this would suggest a P/S multiple of 8.6x.


Match Group Buys Hyperconnect for $1.7 Billion

Equity Capital Markets

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<p><strong>Our base case valuation for Bumble Inc is implied price per share of $72.3, representing a market cap of $13.9 billion and EV of $11.9 billion. Our target price represents an 85% upside to the high end of the IPO price range of $39 per share.</strong> Our valuation uses an EV/S (2021) multiple of 15.9x, which is in line with its main competitor Match Group. Our valuation sensitivity analysis suggests a value range of $60.5 to $85.3 per share. </p>
<p>We believe that the market is willing to put valuation multiples that are at least in line with its biggest competitor the Match Group due to three main reasons: a) Bumble has higher sales growth rate than the Match Group, b) Strong management team led by Whitney Herd. c) improving profit margins. </p>
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Our base case valuation for Bumble Inc is implied price per share of $72.3, representing a market cap of $13.9 billion and EV of $11.9 billion. Our target price represents an 85% upside to the high end of the IPO price range of $39 per share. Our valuation uses an EV/S (2021) multiple of 15.9x, which is in line with its main competitor Match Group. Our valuation sensitivity analysis suggests a value range of $60.5 to $85.3 per share. 
We believe that the market is willing to put valuation multiples that are at least in line with its biggest competitor the Match Group due to three main reasons: a) Bumble has higher sales growth rate than the Match Group, b) Strong management team led by Whitney Herd. c) improving profit margins. 


Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

<p><a href="https://www.smartkarma.com/entities/bumble-inc" target="_blank" data-smartkarma-citation="entities:31309:1" rel="noopener">Bumble (BMBL US)</a> a US-headquartered women-centric dating app is expected to complete its IPO shortly. IPO price and valuation are well covered by Insight provider <a href="https://www.smartkarma.com/profiles/douglas-kim" target="_blank" data-smartkarma-citation="accounts:342" rel="noopener">Douglas Kim</a> in his Insight <a href="https://www.smartkarma.com/insights/bumble-inc-ipo-you-ve-got-mail-fast-forward-23-years" target="_blank" data-smartkarma-citation="insights:47950" rel="noopener">Bumble Inc IPO - "You've Got Mail" Fast Forward 23 Years</a> .</p>
<p>In this Insight, we look at the less disclosed and understood Bumble's India operations along with exploring the revenue potential the market offers. Our on-ground surveillance suggests this is one market and region to watch out and can potentially be one of the key drivers of revenue growth in the future.</p>

Bumble (BMBL US) a US-headquartered women-centric dating app is expected to complete its IPO shortly. IPO price and valuation are well covered by Insight provider Douglas Kim in his Insight Bumble Inc IPO - "You've Got Mail" Fast Forward 23 Years .
In this Insight, we look at the less disclosed and understood Bumble's India operations along with exploring the revenue potential the market offers. Our on-ground surveillance suggests this is one market and region to watch out and can potentially be one of the key drivers of revenue growth in the future.

Bumble (BMBL US) | Swipe Right to Access World's Second-Largest Market

<p><a href="https://www.smartkarma.com/entities/bumble-inc" target="_blank" data-smartkarma-citation="entities:31309:1" rel="noopener">Bumble (BMBL US)</a> is one of the leading dating apps in the US. <a href="https://techcrunch.com/2021/02/08/with-a-higher-ipo-valuation-is-bumble-aiming-for-match-coms-revenue-multiple/" target="_blank" rel="noopener">Bumble</a> has an IPO price range of $37 to $39 per share price and at these prices, the company could raise $1.66 billion to $1.76 billion in this IPO. The IPO price range was recently raised from the previous IPO price range of $28 to $30 per share. The number of shares being offered in the IPO was raised from 34.5 million to 45 million (excluding the underwriters' option of 6.75 million shares). Including the underwriters' option of 6.75 million shares, the company could raise nearly $2 billion at the high end of the IPO price range. </p>

Bumble (BMBL US) is one of the leading dating apps in the US. Bumble has an IPO price range of $37 to $39 per share price and at these prices, the company could raise $1.66 billion to $1.76 billion in this IPO. The IPO price range was recently raised from the previous IPO price range of $28 to $30 per share. The number of shares being offered in the IPO was raised from 34.5 million to 45 million (excluding the underwriters' option of 6.75 million shares). Including the underwriters' option of 6.75 million shares, the company could raise nearly $2 billion at the high end of the IPO price range. 

Bumble Inc IPO - "You've Got Mail" Fast Forward 23 Years

TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

<p>Post 3Q20, we closed out our note saying, “We think COVID will result in more headwinds then tailwinds, which will provide a headwind to guidance, and what we think will be an entry point come February when 2021 guidance is given. By then we will be 3 months closer to vaccines and 3 months closer to last years’ Q2 which was horrendous due to the initial restrictions and gives a great setup for an explosive 2Q21 quarter.”</p><p>Match  pulled back 8% on earnings and is down 11% in two weeks. At 36x forward EV/EBITDA, we are at the same valuation Match was after 2Q and 3Q…except we are now one quarter away from entering a period of accelerating EBITDA growth. Guidance does not contemplate a full return to “normal” by the back half of 2021…which means guidance is likely too conservative. Entry points on one of the great business models in TMT are few and far between. Its time to buy Match.</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

Post 3Q20, we closed out our note saying, “We think COVID will result in more headwinds then tailwinds, which will provide a headwind to guidance, and what we think will be an entry point come February when 2021 guidance is given. By then we will be 3 months closer to vaccines and 3 months closer to last years’ Q2 which was horrendous due to the initial restrictions and gives a great setup for an explosive 2Q21 quarter.”Match  pulled back 8% on earnings and is down 11% in two weeks. At 36x forward EV/EBITDA, we are at the same valuation Match was after 2Q and 3Q…except we are now one quarter away from entering a period of accelerating EBITDA growth. Guidance does not contemplate a full return to “normal” by the back half of 2021…which means guidance is likely too conservative. Entry points on one of the great business models in TMT are few and far between. Its time to buy Match.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

United States

Match Group, Inc. is a dating service provider. The Company offers diverse portfolio of apps and services which enables connections across the spectrum of age, race, gender, sexual orientation, and backgrounds. Match Group serves customers worldwide.

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Match Group (MTCH US)

Match Group Buys Hyperconnect for $1.7 Billion

On 9 February, it was announced that Match Group Inc (MTCH US) has agreed to acquire Hyperconnect for $1.7 billion. Match Group is the biggest...

Douglas Kim

Bumble IPO Valuation Analysis

Our base case valuation for Bumble Inc is implied price per share of $72.3, which represents an 85% upside to the high end of the IPO price range...

Douglas Kim

Bumble (BMBL US) | Swipe Right to Access World's Second-Largest Market

In this Insight, we look at the less disclosed and understood Bumble's India operations along with exploring the revenue potential the market offers.

Pranav Bhavsar

Bumble Inc IPO - "You've Got Mail" Fast Forward 23 Years

Bumble (BMBL US) is one of the leading dating apps in the US. Bumble has an IPO price range of $37 to $39 per share price. The company could raise...

Douglas Kim

Match 4Q20 Earnings: Hook It Up

Match has sold off on 4Q20 earnings based on overly conservative 2021 guidance. We would be buyers on this selloff as 2021 sets up for a strong...

Aaron Gabin

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