Options Bulls Swipe Right on MTCH After Red-Hot Earnings

Dating app Tinder added 200,000 users during the pandemic

Digital Content Manager
Aug 5, 2020 at 11:01 AM
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The shares of Match Group Inc (NASDAQ: MTCHare up 11.9% at $120.36 this morning -- a new record high for the dating company -- after it reported second-quarter profits of $0.51 per share on $555.45 million in revenue, beating Wall Street's estimates. The organization attributed the blowout results to increased demand for its popular online dating app Tinder, which added 200,000 users during the COVID-19 pandemic, as restrictions to stop the spread of the virus limited face-to-face interactions. The company also lifted its third-quarter sales forecast. 

On the charts, the equity has completely recovered from its late-March lows near the $44 level, more than doubling in price since then. Shares have been breaking records on a monthly basis since June, with the 60-day moving average containing most of the equity's pullbacks. Longer term, Match Group stock sports a 59.9% year-over-year lead.

Analysts were optimistic toward MTCH coming into today, with 13 of the 15 in coverage sporting a "strong buy" rating. However, the equity's 12-month consensus price target of $98.74 is a 16.7% discount to current levels, meaning price-target hikes could very well be on the horizon.

What's more, short interest is down 71.5% in the most recent reporting period, indicating Match Group shares may have gotten an additional boost from a short squeeze. There's still plenty of pessimism to be unwound, though. The 11.96 million shares sold short make up 21.7% of the stock's available float, or 2.2 days at the stocks average pace of trading.

That upbeat sentiment is echoed in the options pits, where calls are all the rage. MTCH sports a 50-day put/call volume ratio of 4.01 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 93rd percentile of its annual range. This suggests a healthier-than-usual appetite for bullish bets of late.

Today's options activity shows calls overwhelming puts. So far, 6,274 calls have crossed the tape --  five times the average intraday amount, and more than twice the number of puts traded. Most popular is the weekly 8/7 120-strike call, followed by the 105-strike put in the same series. 

 

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