Small-Cap Highlights: Russell 2000 Drops, Bumble Sells Off, Crocs Shines

This week, the Russell 2000 entered a correction amid accelerating inflation and concerns about further Fed rate hikes. Dating app Bumble agreed to a $1.3 billion sale, while Liquidia’s stock jumped nearly 27% after the pharmaceutical company settled its legal disputes. Analysts saw potential in Crocs and the baby food manufacturer Once Upon a Farm, whose co-founders include Jennifer Garner. The highlights from the small-cap sector for the week of October 12–16 are in the Oninvest digest.

The Russell 2000 small-cap stock index fell 2.2% on October 14 and entered a technical correction for the first time since March. It has lost 11.3% from its August high. A decline of at least 10% from a peak is considered a correction, while a decline of more than 20% is considered a shift into a “bear” trend.

Inflation data triggered the sell-off: in September, U.S. consumer prices rose at the fastest pace since April, and core inflation exceeded expectations. This heightened fears of further Fed rate hikes, and small companies are particularly sensitive to rising borrowing costs.

On Thursday, October 15, the Russell 2000 rebounded by 1.4% and closed the trading week at 2,767.27 points, remaining near the technical correction zone.

On October 13, the developer of the dating service Bumble announced an agreement with Ithaca Holdings: the buyer offered $6.05 in cash for each Class A share. The deal values the company at $1.3 billion. The buyout price is 138% higher than the closing price on October 9—the last trading day before news of the negotiations broke.

During trading on October 13, Bumble's stock rose 56.6% to $5.95. The day before, it had surged 49.6% following a report in The Wall Street Journal about a potential deal.

Once the acquisition is complete, Bumble will become a privately held company. It will be led by Ithaca co-founders Ravi Gupta and John Hegeman, while the service’s founder, Whitney Wolfe Herd, will continue to be involved in its operations. The buyer plans to grow the business using cutting-edge technologies, including AI.

The deal comes amid a decline in business: in the second quarter, revenue for the Bumble group, which includes Badoo, fell 15.2% year-over-year to $210.5 million, while the number of paying users dropped by 16.4%.

CNBC analyst Justin Zacks considers Crocs stock an attractive investment: it is undervalued compared to competitors such as Nike, and demand is being driven by new models, celebrity partnerships, and social media promotions.

One example is the comedy miniseries *Déjà Shoe*, which Crocs and SuperOrdinary launched on TikTok in June. Viewers can purchase the shoes featured in the episodes through TikTok Shop.

Another growth driver is international sales. In the second quarter, Crocs’ revenue outside North America rose 7.8% to $542 million. In the Chinese, Indian, and Japanese markets, the company reported double-digit growth, excluding the impact of currency fluctuations. Meanwhile, the HeyDude business remains weak: revenue for that brand fell 5.7% to $179 million.

Crocs shares have seven "Buy" ratings, one "Overweight" rating, nine "Hold" ratings, and one "Sell" rating. The average price target of $137 implies an increase of approximately 11% by the close of trading on October 16.

Freedom Broker has initiated coverage of organic baby food maker Once Upon a Farm with a “Buy” rating and a price target of $25.50. This is 47% higher than the closing price on October 16. Actress Jennifer Garner is one of the company’s co-founders.

The main driver is distribution expansion. By the end of the second quarter, Once Upon a Farm had installed approximately 4,100 branded refrigerators in stores, and expects to increase that number to about 5,000 by the end of the year. The company is also expanding its product lineup to support families from the introduction of solid foods through the children’s 12th birthday.

In the second quarter, net sales rose 42.3% year-over-year to $85.4 million. However, the company remained unprofitable, posting a net loss of $5 million. Freedom expects profits to grow faster than revenue after 2026. Analysts cite weak returns on refrigerators and violations of food safety requirements as risks.

According to MarketWatch, six analysts recommend buying the stock, while four recommend holding it. The average price target of $24.94 implies upside potential of about 43.7% by the close of trading on October 16.

Shares of the pharmaceutical company Liquidia rose 26.6% on October 14, to $33.94. The company has reached a settlement on all six legal disputes with United Therapeutics. This will allow it to continue selling the inhaled medication Yutrepia for the treatment of pulmonary arterial hypertension.

The total amount of net payments will be $380.7 million. Of this amount, Liquidia will transfer $175 million to United Therapeutics within 30 business days, and an additional $72.7 million each by January 31 and April 30, 2027. The remaining $60.3 million will be distributed to third parties with an interest in the antitrust proceedings.

At the same time, Liquidia filed paperwork to have another indication—pulmonary hypertension associated with interstitial lung disease—removed from Yutrepia’s prescribing information and ceased promoting the drug for such patients.

Liquidia’s securities have five “Buy” ratings, one “Overweight” rating (indicating expectations of above-market growth and a recommendation to buy), and three “Hold” ratings. The average target price of $54.38 implies an increase of approximately 58% from the close on October 16.