Bumble Inc. (Nassdaq: BMBL) is one of the hottest stocks on the market right now, but investors could be paying too much for the stock.

Don't get us wrong – this is an exciting company, but its already brought big gains to early investors. Those buying now might just be helping the fat cats cash out.

As one of the world's leading online dating companies, the IPO was surrounded with hype. It sold 50 million shares at $43 a pop. That placed a value on Bumble of almost $8 billion at the IPO.

Of course, the tech rally was still ongoing back in the distant days of February, so the stock price skyrocketed on the day of the offering and eventually placed a value on the stock of over $13 billion.

That is fantastic news if you were one of the lucky few who were able to purchase IPO shares. A 70% one-day gain is always nice if you can get it.

If you were a big client of Goldman Sachs Group Inc. (NYSE: GS), JPMorgan Chase & Co. (NYSE: JPM), or Citigroup Inc. (NYSE: C), you might have gotten a few shares as a thank you.

If you have dear friends or close relatives working at Bumble's private equity majority owner, Blackstone Group Inc. (NYSE: BX), you might have been given a small allocation of IPO shares.

The IPO and subsequent jump in price were fantastic news for Blackstone. They bought control of Bumble back in late 2019 in a deal that valued the company at just $3 billion.

Since the IPO, the stock has fallen off, with the stock now trading around $60.

That has investors wondering if the stock is a bargain now compared to its IPO bounce. Not to mention, vaccines and fewer restrictions on bars and restaurants could have the dating scene buzzing again.

But there's more to the story here.

Let's look at the pros and cons of buying Bumble stock…

The Pros and Cons of Bumble Stock

The pros are that when you combine Bumble, the world's only dating site built with women at the center, and the Badoo Date Honestly app, you have the second largest online dating site, with only Match Group Inc. (Nasdaq: MTCH) capturing a bigger market share.

The big story part of the story is that Bumble is the only dating app where women have to make the first move. Women are in control of the whole process, and as a result, Bumble has 30% more female than male users.

Bumble also has machine learning technology that automatically blurs indecent or inappropriate language to create a safer environment for women.

Bumble is developing Bumble BFF and Bumble Bizz, platforms for women to form friendships and build business relationships. The company points out that there are 3.8 billion women globally, of which approximately 1.1 billion are single, and 1.8 billion are working, but only one technology platform putting women's needs first.

Online dating has become widely accepted and is now one of the more common ways to initiate relationships. The acceptance process accelerated during the pandemic as it was pretty much the only way to meet someone new.

Bumble also has a phenomenal CEO in 31-year-old Whitney Heard. Ms. Heard was a co-founder of the dating app Tinder and was a VP of marketing for several years.

She is the youngest female ever to take a company public and is also the world's youngest self-made female billionaire.

With all that going for the company, it's no surprise why Bumble is a popular stock.

But there are some negatives to buying the stock at current prices.

First, Blackstone owns most of the stock and almost all of the control. It owns 60% of the common stock, but along with the three top executives of Bumble, controls over 90% of the voting rights.

With respect to corporate governance, it's a dictatorship, not a democracy.

That is tempered somewhat by the fact that Blackstone has a vested interest in getting the stock price higher. Its investors expect high returns on the investment, and with their funds owning 60% of the stock, they will want a much higher price before they exit their position entirely.

Blackstone gets an incentive fee of 20% of the profits, so it has a lot of money at stake.

The second drawback is that there seems to be a switch away from the pandemic stocks to the reopening stocks underway, and that could very well push the price of online dating companies a lot lower.

That could lead to a pretty steep decline. With the stock trading at 12 times revenue, it is hard to make the case that the stock is a bargain.

We also need to consider that the company is currently valued at twice what Blackstone paid for the company just 16 months ago. If we take the $3 billion the private equity firm paid and kick it up a notch for the pandemic acceleration of online dating, a decent valuation for Bumble is probably between $35-$40 a share.

That's about where the underwriters were initially pricing the deal before the intense buying pressure for tech IPOs gave them a chance to ramp up pricing for the deal.

We think Bumble's unique approach to online dating could be a winner, but experience reminds us that you can pay too much for anything, no matter how exciting the story.

In a tech and broad market sell-off, Bumble's shares could easily fall to and below the IPO price.

That's probably going to be the best time to consider being a buyer of Bumble shares.