Match Stock Burns Short Sellers After Earnings

This is Match Group's second straight blowout earnings report

by Patrick Martin

Published on Aug 7, 2019 at 9:59 AM

One of the big earnings winners this morning is Match Group Inc (NASDAQ:MTCH), after the dating services company reported adjusted second-quarter earnings per share of 43 cents on $498 million in revenue, topping the expectations of 40 cents on $489 million. Not only that, Match raised its fiscal-year forecast, citing the popularity of its Tinder app, which boasted more subscribers this quarter. 

If this all sounds familiar, it's because Match Group reported a similar blowout report back in May. At last check, Match Group stock was up 14.5% to trade at $84.65, and earlier nabbed a record high of $86.78. The shares are on track for their best single-session gain since nearly a year ago today, and have more than doubled in the last 12 months. What's more, recent pullbacks have found support at MTCH's ascending 50-day moving average.

So far, only Evercore has come forward with a bull note, hiking its price target to $78 from $60. But even that's a discount from its current price, and nine of the 14 other brokerages in coverage maintain tepid "hold" ratings. The door is definitely open for more price-target hikes, considering the security's 12-month consensus price target sits at $70.71, south of last night's closing perch of $73.91.

Short sellers are likely headed for the hills. Short interest fell off by 5% in the two most recent reporting period, yet the 19.49 million shares sold short still accounts for a hefty 38% of MTCH's total available float. At the stock's average pace of trading, it would take shorts almost 12 days to buy back their bearish bets, an ample amount of buying power still on the sidelines.

Pessimism can also be unwound in the options pits. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MTCH's 10-day put/call volume ratio of 0.99 ranks in the 92nd percentile of its annual range. While this shows calls have still outnumbered puts on an absolute basis, it indicates the rate of put buying relative to call buying has been accelerated the past two weeks.

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