Bumble acquisition has investors buzzing

It’s getting crowded on the dating app dancefloor. Private equity crew Blackstone Group are the latest to make their move, getting in behind lady-leading app Bumble. The acquisition has even bigger ramifications for the wider industry, with Bumble founder Whitney Wolfe Herd taking over as CE of MagicLab as part of the deal. MagicLabs has a series of other match-making apps on its books including Badoo and its 450 million users. The deal values Bumble and the wider business at roughly $3 billion.

Bumble has long been the target of potential suitors, with Match Group – the owner of Tinder and OkCupid – said to have made a pass that was swiftly rejected. Blackstone’s successful wooing has now set the rumour mill alight around a potential MagicLab IPO. Founder Andrey Andreev had been teasing the possibility of listing on the Nasdaq last year before controversy engulfed Badoo following reports of a toxic and sleazy misogynistic workplace culture. His exit from MagicLab, including selling his shares and handing the reins to Wolfe Herd, has sparked new interest in the company’s next steps.

MagicLab has long been profitable, generating some $400 million in cash in 2018 with an annual revenue growth of 40%. The backing of an established big name in Blackstone combined with new leadership will keep tongues wagging about its prospects for some time yet. The market may already like what it sees, with shares in Match Group (MTCH) taking an immediate 2% dip on the news. Watch this space.

Value feeling the love

Since 2007, growth investors have been flying high. In the longest run in US sharemarket history, growth shares have been putting their value peers to shame year after year after year. But is standard service set to resume?

There are signs that perhaps the market is swinging in behind undervalued shares, with value ETFs built on holdings like AT&T, Citigroup and Pfizer turning the tables on growth equivalents in September. The Bank of America (BAC) (itself a value share) jumped into the news to say the only times in history that value shares have been this cheap by comparison were 2003 and 2008. It highlighted the strong performance of the healthcare sector, in particular, general optimism about trade and better than expected jobs and economic data as potentially supporting the pendulum swing.

While the recent resurgence doesn’t necessarily signal the start of a decade trend just yet, history does suggest that it will arrive at some point. Analysts have taken note, and even hedge fund sceptics are pointing out the wisdom of investors boosting their allocation toward value shares right now. 

If your interest is piqued, check out some of the value ETF options on Hatch.

Who would bet against Netflix?

Not Andrew Left. At least not anymore. The notorious short-seller behind Citron Research hasn’t just changed his tune: he’s whistling a brand new one. Earlier this year Left came out firing against Netflix (NFLX) investors, calling them “blind as Bird Box” after the streaming giant had seen its share price embark on the type of rollercoaster ride in 2018 that would have left a few squeamish passengers.

Back then, Left didn’t share Wall Streets’ bullish stance on Netflix’s prospects, and he was right – eventually – when the share price hit its 2019 peak in July before taking a hiding through to September. But since then, Netflix has been in recovery and traders betting against it lost nearly $300 million on October 17 when earnings hit the market.  

No doubt this has triggered Left’s change of heart. In a recent Tweet, Citron Research pointed to new data showing that international subscribers were set to drive Netflix’s growth, and it was jumping on for the ride. The bear is now the bull.

To receive the full Hatch Weekly Newsletter every Tuesday morning, subscribe below.