Investing in initial public offerings (IPO) requires a lot of courage and patience. When companies go public, their stock can seem extraordinarily expensive relative to their past financials. But with their newly infused capital, they might just grow to heights previously unimaginable…
Today, let’s look at why a dating app company, a do-it-yourself video game publishing company, and a healthcare tech company are among the best recently IPOed stocks to buy now. They are Bumble (NASDAQ:BMBL), Roblox (NYSE:RBLX), and Hims & Hers (NYSE:HIMS).
Bumble owns two dating apps, its namesake brand and Badoo. The former isn’t too different from others in the category, but it has the added feature of only allowing women to message first after matches. Even though it appears insignificant, this added detail has attracted a loyal user base of singles who prefer more wholesome and safer starts to online relationships.
The latter of Bumble’s brands focuses on establishing a social network for dating users. Together, Bumble and Badoo have over 40 million monthly active users, with 2.5 million paid subscribers. As with any dating app, Bumble is free to use and has a paid tier for subscribers who want the app’s algorithm to make better matches.
Last year, Bumble’s revenue increased by 11% year over year to $542.1 million. Meanwhile, its free cash flow fell by 50% from 2019 to $45.6 million. This was mainly due to one-time legal, accounting, consulting, and investor relations expenses related to its February IPO.
Right now, its stock is trading at 12.7 times sales, which is expensive for a moderate growth rate. However, the company does have a good product that is easily scalable, with a substantial international presence. The Bumble and Badoo apps are among the top five highest-grossing iOS lifestyle apps in over 30 countries. The company has definitely found its niche in the dating world. Interested tech investors should check out the stock as a long-term buy-and-hold option.
At 46 times revenue, Roblox seems like a ridiculously overvalued stock. However, the company has impressive results to back up its price. Roblox allows freelance video game designers and other entities to self-publish their content on its platform. Simultaneously its users can access the games on just about any device, including iOS, Android, PC, Mac, Xbox, and virtual reality gadgets like Oculus Rift.
The games are free to play. Roblox makes money when its users pay for in-game purchases or upgrades to their avatars with the company’s virtual currency, Robux. By the end of 2020, Roblox had 32.6 million daily active users, which is an 85% increase over 2019. There are now more than 20 million games available on its platform.
The company generated $924 million in revenue last year, compared to $508.4 million in 2019. At the same time, Roblox improved its free cash flow by a stunning 2,736% year over year to $411.2 million. The increase is largely the result of the COVID-19 pandemic forcing people to stay at home and turn to video games for fun.
What I like most about Roblox is its ability to sustain its growth. The company is still…
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