Whitney Wolfe Herd’s exit as CEO of Bumble is a sign that Americans are falling out of love with online dating.
The 34-year-old entrepreneur founded the female-centric dating app nearly a decade ago and took the company public in 2021, making her a described as the youngest self-made female billionaire. Herd also co-founded the dating app Tinder.
Bumble said On Monday, Herd will be succeeded as CEO by Slack CEO Lidiane Jones. Herd will remain with Bumble as executive chairman of the company in Austin, Texas.
The management shuffle at Bumble coincides with headwinds for the broader dating app business as user growth slows and companies struggle to innovate and monetize the matchmaking platforms.
Bumble also owns apps Badoo, Fruitz and Official for making friends and networking. The other major industry player, publicly traded Match Group, owns Hinge, Tinder and other dating apps.
What sets Bumble apart from the competition is that women make the first move — a feature designed to give them more control over their dating lives and help limit unsolicited messages from prospects who don’t interest them.
Bumble remains profitable. In Tuesday’s business reported net income of $23.1 million on revenue of $275.5 million for the third quarter, up from $232.6 million a year ago. But shares of the company have fallen, closing Monday at $13.42, down about 40% on the year and from $76 in its market debut two years ago.
“With loneliness increasing globally to the point that it has been declared an epidemic in the United States, there is significant room for each of our apps to grow and have a significant impact on people’s lives,” Herd said on the company’s earnings call.
Are young people avoiding apps?
For dating companies, however, the competition to cash in on this loneliness has become increasingly fierce amid a proliferation of apps aimed at all sorts of customers and signs that online dating is losing its luster with younger Americans.
Tinder said it lost paid users in the third quarter and forecast fourth-quarter revenue that missed analysts’ expectations. Bumble said it had 3.8 million paying users across its apps in its latest quarter, up from 3.3 million in the year-ago period.
“Younger audiences, like Generation Z, don’t use dating apps in the same way. Many use social media like Instagram and TikTok to meet people, and it’s different from swiping right and left, which is such a big feature of online dating,” said Citigroup analyst Ygal Arounian.
Dating apps have struggled to add users in recent quarters, according to a recent Morgan Stanley report.
“Furthering the perception that the industry is simply becoming saturated, mature or over-monetized, the top dating apps reported slowing revenue growth in 2022 (the industry collectively reported around $2.6 billion in revenue for the year) and moderate guidance for 2023,” Morgan Stanley analysts.
According to one examination on college student dating views from Axios and The Generation Lab, nearly 80% of respondents said they don’t use dating apps regularly. Over half said they met their partners in person, compared to 15% who said they met on a dating app.
Financial uncertainty is also weighing on singles’ willingness to pay for dating app subscriptions, according to industry analysts.
“At an industry level, we see some challenges to overall user growth and time spent on online dating app,” Arounian told CBS MoneyWatch.
Most dating apps allow people to use the services for free, but charge a premium for an enhanced experience that often promises to increase a user’s chances of matching with high-quality prospects.
At Bumble, Jones will have to prove she can find new growth opportunities to regain Wall Street’s trust.
“The new strategy of the incoming CEO will be decisive for whether people will invest,” Jefferies analyst James Heaney told CBS MoneyWatch. “She is still an unknown quantity and there will be a period of deepening to see how the new CEO thinks about the business.”
The move at Bumble comes after another recent high-level departure at the company, with former president Tariq Shaukat stepping down from his post in May.
“There are certainly a lot of questions around what’s going on in the industry, given the slowdown around Tinder in particular. It’s a big blow to the space,” Heaney added. “But I think I think problems on Tinder are idiosyncratic to them. There’s still plenty of runway left in the online dating space. There’s plenty of room for more people to pay to use these apps. “