Blackstone made over $2 billion (while wiping out the public) by exploiting consensual hallucination. There are no victims here.

By Wolf Richter for WOLF STREET.

Bumble Inc., owner of the dating apps Bumble and Badoo, revealed another hot prospect for success last night – now almost quarterly – when it released its second-quarter results: The company lowered its revenue growth forecast from 8-11% to 1-2%, while the average expectation was 8%.

“We are adjusting our guidance today to reflect the actions we are taking to position Bumble to restart user growth, deliver improved customer value and deliver long-term revenue growth,” it said.

Kathoomph shares rose 32% this morning to a record low of $5.44 per share, down about 95% from its intraday high on the second day after its IPO in February 2021 and down 87% from its IPO price.

The release of the second-quarter results follows the first-quarter release, which also included a pessimistic forecast, punctuated by layoffs and plans to relaunch the Bumble app and update the Premium Plus subscription.

Bumble went public via IPO in February 2021 amid much fanfare and at the height of what we call the consensual hallucination. The IPO price was set at $43 per share. The first trade was at $76 per share, causing a massively hyped “pop.” On the second day of the pop, shares hit an intraday high of $84.80, giving them a market cap of nearly $10 billion. Since then, shares have been plunging on and off.

The company’s two dating apps went in different directions in terms of revenue growth in the second quarter: Bumble’s revenue rose 4.8% to $218 million in the quarter; Badoo’s and “other revenue” fell 2.2% to $50.6 million. Total paying users grew 14%, but revenue per paying user fell 9%.

Unlike many other vendors out there, the company actually made money: net income rose to $37.7 million in the quarter, and in the first half of the year it rose to $71.6 million.

The company made it into our pantheon of imploded stocks in March 2022, when its quarterly earnings report at the time sent shares down 18% that day to $19 per share and 78% from its intraday high in February 2021. By that point, shares had plunged 78% in 13 months, and the heavy lifting was done.

Since its peak in 2021, the market capitalization has plummeted from $10 billion to $686 million.

But Blackstone made a lot of money from this deal.

With the IPO, private equity firm Blackstone began dumping this creature into the public’s lap in an epic and entirely legal pump-and-dump operation.

In November 2019, Blackstone announced that it was acquiring a majority stake in MagicLab for $2 billion, valuing the entire company at $3 billion.

MagicLab owned dating app Bumble, international dating app Badoo, gay dating app Chappy, and dating app Lumen for over-50s (in 2020, Blackstone closed Chappy and Lumen). The seller was Russian billionaire and Badoo founder Andrey Andreev, and he was out. Bumble founder and CEO Whitney Wolfe Herd became CEO of MagicLab.

Then comes the payday for Blackstone.

In typical private equity practice, the company was denied a special dividend of $300 million.

At the IPO in February 2021, Blackstone sold some of its shares for $2 billion and now owned 98.23 million shares.

In September 2021, Blackstone sold another 20.7 million shares valued at about $1 billion in a secondary offering, bringing its haul from share sales and dividends to $3.3 billion.

In March 2023, the 13D/A filing with the SEC revealed that Blackstone had sold an additional 11.76 million shares, reducing its stake to 65.79 million shares, or 39.5% of Bumble. If it had received an average of $35 per share, it would have raised an additional $467 million in proceeds, bringing the total to $3.77 million.

In March 2024, 13D/F filings showed that Blackstone had sold another 11.7 million shares, reducing its stake to 54.08 million shares, or 35.8% of Bumble. If it had received an average of $15 per share, it would have raised another $175 million, bringing the total to nearly $4 billion, on a $2 billion investment while the public walked away empty-handed.

That’s the latest we have. Blackstone is probably still unloading its shares as the price collapses. The company has been selling about 1 million shares a month. By now, its stake may have dropped to 50 million shares at $5.44 per share, or about $272 million at today’s price. So all that’s left is a purge to clean up the stock market.

You can see the filings on our dedicated WOLF STREET page for each company whose ticker we list (via Fintel). For Bumble’s data, including SEC filings, short interest, etc., click on the ticker (BMBL) and then scroll down.

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