We came across a bullish thesis on Bumble Inc. (BMBL) on WallStreetBets subreddit page by Super-Sir-1143. In this article, we will summarize the bulls’ thesis on BMBL. BMBL Technologies, Inc. share was trading at $6.38 as of Sept 30th. BMBL’s trailing and forward P/E were 18.74 and 8.61 respectively according to Yahoo Finance.

Bumble’s stock has dropped significantly, over 40% after its Q2 earnings report and more than 90% from its peak. Investors are unhappy with how the company is managing its profits, even though Bumble is making a steady annual profit of $120-150 million. The company’s market value is now below $900 million, and its revenue hasn’t changed much year-over-year. Despite this, Bumble remains one of the top-grossing apps in the U.S. and worldwide. One positive aspect is Bumble’s strategy of buying back its own stock, similar to Warren Buffett’s approach when a stock is undervalued. Bumble has $287 million in cash and through its share buyback program it has already returned $241 million to shareholders. With $209 million remaining on its $450 million repurchase authorization, Bumble plans to repurchase about 25% of its shares in the next 6 to 12 months. Management is committed to this buyback strategy, seeing it as a smart use of capital.

A discounted cash flow (DCF) model suggests Bumble’s fair value could be around $14 per share, based on future cash flow estimates, a 10% cost of capital, and no growth in the terminal value. This valuation is much higher than its current price, which is below $7. Bumble’s solid fundamentals and aggressive buyback strategy indicate a potential stock recovery if the market reassesses its value.

Thus, Bumble seems like an interesting pick given its fundamentals, high user base, strategic share buyback program, and potential undervaluation presenting a compelling investment case if the market begins to recognize these factors.

Bumble Inc. is also not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held BMBL at the end of the second quarter which was 30 in the previous quarter. While we acknowledge the risk and potential of BMBL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BMBL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.