Last week, the institutional investor challenging statements of financial viability made by Bumble Inc. leading up to the company’s September 2021 secondary public offering (SPO) filed an amended securities complaint. The class action leveled accusations at not only Bumble’s CEO and co-founder Whitney Wolfe Herd and CFO, but also the investment fund who owns a controlling stake of the company, Blackstone Inc., its directors, and more than 20 underwriting firms who sponsored the SPO.
The suit explained that following accusations of a misogynistic culture at London, England-headquartered Bumble, co-founder and Russian billionaire Audrey Andreev sold out to Blackstone for $2 billion in January 2020.
Exercising an option agreed to as part of the terms of Blackstone’s purchase, the defendants launched an SPO which allowed Blackstone to sell millions of Bumble shares, the complaint said. However, the offering, which earned Blackstone over $1.1 billion, was purportedly “based on a misleading story about Bumble’s growth and, in particular, growth in paying users told in materially defective offering documents, including a SPO Registration Statement, Prospectus and other Bumble SEC filings.”
For example, the complaint said that the defendants boasted that Bumble’s “growing” Badoo and Bumble user communities provided it with expectations of a growing paying user base, citing results showing a nearly 25% increase in total paying users over a year. The filing added that the offering documents presented risks to growth “as mere hypothetical possibilities.”
Just shy of two months after the SPO, the truth about Bumble’s vitality emerged, the complaint said. When on Nov. 10, 2021 the third quarter financials revealed declines in the apps’ paying user bases resulting in a decline in revenue, Bumble’s share price fell by more than 24.4% over the next two trading days.
“Investors suffered massive losses,” the complaint contended. On behalf of people or entities who acquired Bumble common stock between Sept. 10, 2021 and Jan. 24, 2022, and who sustained losses, the suit sought relief from federal securities law violations.
Bernstein Litowitz Berger & Grossman LLP has been appointed lead counsel for lead plaintiff Louisiana Sheriffs’ Pension and Relief Fund.
Bumble and its executives are represented by Simpson Thacher & Bartlett LLP.