Our target price of $7.00 per share is based on an even weighting of our projected valuations: DCF-based valuation ($7/sh, 11% WACC, 2% terminal growth rate), 2026E EV/revenue multiple (2x), and 2026E EV/EBITDA multiple (6x). Our target multiples are below the ~two-year averages of 2x and 7.5x, respectively, given the declining revenue trends.

Downside risks to our target price include: 1) the app rebuild fails to improve the user experience and ecosystem; 2) competition with MTCH brands and new entrants intensifies given the low switching costs; 3) Tinder is successful in its stated goal to become more "women friendly"; 4) new use cases like friendships and professional network fail to materialize; and 5) app stores continue to attach payment requirements in key markets, leading to high take-rates on Bumble’s in-app purchases and lower overall profitability.

Upside risks to our target price include: 1) top-of-funnel trends improve sooner than expected; 2) its app rebuild sees better-than-expected results with better user trends, and impacts are felt sooner than expected; and 3) payer conversion improves with better product and marketing.