Wendy's Stock Trading RPG
Made a free Wendy's flash game: https://gregw134.itch.io/diamond-patties You start out behind the Wendy's dumpster in 1990, doing oddjobs. The game has actual stock data for each quarter, the goal is to trade your way up to a trillion by 2026 and beat Elon to Mars. There's also a Wendy's corporate subplot, make sure to check that out. Doesn't work well on phones btw, laptop recommended.
u/gregw134 — 7 days ago
Bumble ($BMBL) Buyout Rumors
Wanted to share a DD I wrote on $BMBL. Honestly there is a decent chance this stock continues to be a money pit, but if they pull off even a slight turnaround it could 2-5x, and we should find out the direction it's headed in the next 6-9 months. Original writeup on substack.
So rumor yesterday, Bumble is looking for a buyout. The company is undeniably cheap:
They’re making $280M cash earnings a year on $930M revenue and are priced at only $445M. That’s a multiple of 1.5x, or 2.6x if you include their $300M debt (net of cash). Probably one of the cheapest stocks on the market.
I had already been looking at Bumble with a fly’s enthusiasm for rotting meat. There are lots of problems that we’ll get into, but at $2.94 there are 3 reasons to buy:
- Reuters announced today Bumble is looking to get acquired. If they get acquired at a very cheap multiple of 5x on 250M Ebitda, that’s $6.60 a share.
- Bumble is telling us they’ve stopped bleeding users, maybe, and third party data confirms it.
- Bumble knows they suck. They announced they’re getting rid of the swipe and are pivoting to AI-based matchmaking, with a huge marketing push in Q4. Maybe this is a bad thing, I dunno, but if they succeed and get even a low stock multiple of 12-15x earnings it could be worth $10-$20.
Anyways, there’s at least 3 scenarios in which this is a multibagger, and they could all play out this year.
Bumble Origins
I watched the Bumble movie for research, so take this with a grain of salt.
According to the movie Whitney Herd was a cofounder at Tinder. Tinder was apparently a toxic place, she ends up falling out with the cofounders and suing for sexual harassment and wins a settlement. Feeling snubbed, she pairs up with Andrey Andreev, the Russian billionaire cofounder of Badoo, which had taken off everywhere but in the US. Andrey bankrolls Whitney’s founding of Bumble, which was marketed as a woman-friendly dating app.
It worked, kinda, for a couple reasons. First, women on Tinder felt a bit like they were being thrown to piranhas. There’s always been more men than women on dating apps, so women just get bombarded with messages and sometimes unsolicited dick picks, etc. Bumble’s solution was to make the women message first when they match, which isn’t really the natural dynamic but it solved the message spam problem. Bumble establishes itself as #2 in the dating app market behind Tinder, marketing itself as the woman-friendly Tinder alternative.
In 2019 Andrey Andreev, the Badoo cofounder and 79% owner of Bumble, also has a sexual harassment scandal. Not a great look. He gets kicked out and his ownership stake is sold to private equity, BlackStone.
2019-2024: Private Equity Enshittification
BlackStone borrows $3B to buy Andrey’s 79% ownership of Bumble, saddles that debt onto the company and then ipo’s to dump their shares on the public. Along the way they extract as much money as they can. First they fund buybacks when Bumble was trading at $50 a share. Basically transferring all of Bumble’s cash to themselves while they selling shares.
Then they just kinda operated the company in an extremely greedy manner for years without making things better for users. First off, let’s point out that at its core Bumble (and Tinder) use dark patterns to keep users hooked. They know which users are matches, but instead of showing them upfront they stagger out a couple a day, turning the app into a slot machine. On the transcripts they said they had developed better algorithms, but they kept it as a paid feature. Meanwhile their focus was on rolling out “consumables”, fake flowers guys can pay to send women, etc. Their only real attempt at innovation was a weird blockchain pivot they considered in 2022. Zero focus on actually getting users better dates.
“we have dozens, if not hundreds of experiments going on at any given time”, “price optimization and pricing analytics and price testing… is core to the DNA of Bumble”, “our goal is always to maximize revenue in any market.” etc.
So by 2023 an analyst straight up asked them on the call “are you sacrificing the health of the product in order to drive revenue growth.”
2024: Bumble Removes The One Thing That Made Them Unique
So first, Bumble’s ads in 2024 are out of touch, some women really did not like this:
Bumble’s main distinguishing feature was making women message first. This wasn’t necessarily a great feature, but it was Bumble’s identity, their motto was “make the first move”. So around 2022 Bumble decided, hey wait we can monetize this, and added compliments, essentially men can message first but only if they pay! Yikes.
Then in 2024 some men’s rights activists sued Bumble saying their policy was discriminatory. So Bumble relaxes the one thing that made them unique, and lets men message first. Their internal metrics improved, but they destroyed the only thing that made them stand out from other dating apps. They became a Tinder with less users. Meanwhile, Match Group (Tinder owner) comes out with Hinge, which is basically Bumble with slightly less dark patterns. Users start leaving:
2024-Now: Bumble finds Jesus
Whitney Herd and other execs step down. The new CEO admits the obvious, they have focused entirely on monetizing their users without investing in their product. “Quality reset” is the term. Ad spend is cut 85%, a third of the employees are laid off.
They actually made some decent changes. They started requiring verified ids to cut out bots and spammers. They remove some ways they were monetizing users, start talking about making the free experience better.
After a year, Whitney Herd comes back, speaking a new language. AI-powered Bumble 2.0, powered by a completely new tech backend.
“We are getting rid of the swipe”
From last earnings call:
“Everyone is exhausted from this passive model of just low-effort likes, low-effort interest with very little follow-through. Frankly, the industry at large—and us included—has made it too easy to express low-intent interest. We are turning that on its head.”
“We are a dating app. We are not a matching app or a swiping app, but have we really been behaving like that?”
A lot of talk is currently being talked. The official narrative from Bumble is that the 5% quarterly decline in users was on purpose as part of a quality reset, and “the kpis have stabilized in Q2”.
“the interaction model is outdated, not just for us, but for the industry at large. I believe it is time to leapfrog anything that currently exists.” “I really believe that this is going to be category-defining, and we want to keep it close to the chest.”
“we expect to introduce the initial features of our new interaction model and profile. This is our big bang. It will start to roll out to select markets in Q4, backed by a 360 marketing campaign.“
We don't know much yet, a Reddit user that got in an A/B test said he "doesn't hate it", which I'll take.
How Fast is Bumble Dying?
So can Bumble pull off an AI-powered Bumble 2.0 and revolutionize dating? I'm skeptical. Fortunately, none of that needs to be true for this to be a good trade. At 440M market cap for a company making 250M+ a year, the bar is on the floor. If they can slow user decline to like, 3-5% a year (from 5% a quarter!), they could probably be bought out at like $6.30 a share (5x multiple on 250M EBITDA - 300 net debt). If they actually stop declining and start growing again even 2-3% a year, very possible for them to get a 10x multiple and be valued at $15 a share.
So how fast is Bumble dying? They are claiming their user decline was intentional, which nobody believes, but they have a point that kicking users out and cutting marketing 85% has had an impact. They are claiming that “kpis are stabilizing” heading into Q2.
We’re kind of seeing a flattening on the user curve:
From Google trends it’s not obvious Bumble is dying, if anything it’s had an uptick:
I got a trial to a site that collects app data (AppTweak), here’s the number of daily iOS ratings for Bumble in the US:
You can see the drop from January through May but in the last two months it has inflected and is trending up. So we’re seeing early signs that user decline has stalled.
To reiterate, the market usually values profitable stable companies at multiples like 10x, which in Bumble’s case would be about $15 a share. We’re going to have to see at next earnings on Aug. 5, but if they say users only declined 3% and we project slight growth next quarter, the market could react very positively.
Trade Thoughts
The market isn’t wrong to price Bumble cheaply. This is a company that was poorly run by private equity, who was entirely focused on making money and not on improving the user experience. Users have been migrating to Hinge. Gen Z generally isn't fond of dating apps. The situation is looking pretty bleak. It looks like Bumble is finally making a serious attempt to unenshittify and actually care about their users. They rebuilt their tech stack and are planning on a big AI Bumble 2.0 launch in Q4.
At this price though extreme pessimism is baked in ($440M for a company that made $280M cash earnings in the last 12 months!). It's probably a good trade setup for the next 6 months, the chart has bottomed and at this valuation there's hopefully some downside protection. There are 3 shots on goal that could make this a multi-bagger: 1) user decline stopping or even just slowing 2) buyout talks, 3) AI-powered Bumble 2.0, which should launch with a big marketing campaign in select cities in Q4. I'm skeptical, but the current price is extremely low which offers some safety so I'm going to give Bumble a shot. If none of these things happen by January though I’m out.
u/gregw134 — 8 days ago
▲ 16 r/ValueInvesting
Bumble Deep Dive
$460M market cap company that did $284M cash flow last year, with only $300M net debt. That's a 1.5x cash flow multiple, compared to 8x for ADBE, 6.5x for LULU.
The catch is their users have been dropping 5% every quarter...
I did a full writeup here: https://gregw134.substack.com/p/bumble-buyout-rumors
u/gregw134 — 10 days ago
▲ 0 r/wendys
Wendy's stock trading rpg
Alright perfect time for the Wendy's flash game I've been vibe coding (mods it's free): https://gregw134.itch.io/diamond-patties
The game starts in 1990, working behind the Wendy's dumpster:
It's set up with historical stock data:
Trade well enough you can escape the Wendy's life:
Flip enough burgers you can make it to corporate:
There's fights and mini-games:
Doesn't work well on phones btw, laptop recommended. Goal is to become a trillionaire by 2026 and beat Elon to Mars.
u/gregw134 — 12 days ago