Bumble plunges as AI revamp strategy fails to woo investors amid falling paying users

By Kritika Lamba

Aug 7 (Reuters) - Bumble BMBL.O shares slumped 17% on Thursday after another quarter of declines in paying users raised questions about the dating app operator's turnaround efforts, including AI initiatives, and long-term growth prospects.

The company reported after market hours on Wednesday that total paying users dropped 8.7% to 3.8 million in the second quarter, despite efforts to improve the quality of its user base and foster more meaningful connections by linking users with similar engagement and intent.

Bumble had 4 million paying users in the first quarter and 4.2 million in the fourth quarter of the previous year, by comparison.

Meanwhile, Bumble's direct rival Hinge, owned by Match Group MTCH.O, has continued to outperform due to its stronger international market presence and competitive AI suite that offers more personalized matches.

Hinge's focus on authentic profiles and innovative prompts has differentiated it from its competitors, helping it achieve higher user engagement and retention rates, analysts have noted. Meanwhile, Bumble still remains in the early stages of its strategy to improve user experience.

The company has rolled out new AI-powered features to expand trust and safety tools, but analysts have said the strategy will weigh on user and payer growth in the near term, especially as stricter verification measures roll out.

"It remains very early days here and visibility to users and payers is lower in our view," analysts at Citi said, adding that higher marketing, along with research and development expenses, may pressure margins into 2026.

The Austin, Texas-based company's shares have fallen more than 6% so far this year. The stock trades at 7.96 times its projected earnings for the next 12 months, compared with 14.64 times for Match Group.