Jefferies Cautions on Bumble (BMBL) and Internet Sector for 2026 Warning AI Agents and Rising Costs Could Capping Stock Multiples

Group 1: Company Performance - Bumble Inc. reported total revenue of $246 million for Q3 2025, reflecting a 10% decline year-over-year [2] - The Bumble App generated $199 million, also down 10%, while Badoo and other revenue decreased by 11% to $47 million [2] - Despite revenue contraction, Bumble achieved a net income of $52 million, recovering from a net loss of $849 million in the previous year, which was impacted by approximately $900 million in non-cash impairment charges [2] Group 2: User Metrics and Strategy - The company has prioritized quality over quantity, resulting in a 16% decline in total paying users to 3.6 million [3] - This focus on higher-value members led to a 6.9% increase in Average Revenue per Paying User, which rose to $22.64 [3] - The relaunch of BFF (formerly Bumble For Friends) has improved user retention, although the new app has not yet generated significant revenue as of September 30 [3] Group 3: Future Outlook - Bumble provided a cautious outlook for Q4, projecting revenue between $216 million and $224 million, indicating a 14% to 17% year-over-year decline [4] - Adjusted EBITDA is expected to be between $61 million and $65 million, with margins of 28% to 29% [4] Group 4: Analyst Insights - Jefferies lowered Bumble's price target to $4 from $5 while maintaining a Hold rating, recommending a cautious stock-picking approach for the Internet sector in 2026 [1] - Key risks identified include limited margin growth due to rising investment costs and the potential impact of AI agents on traditional platforms, which may cap stock multiples [1]