Contrarians Should Love This Dating Services Stock

MTCH just pulled back to a trendline with bullish implications

by Research Dept.

Published on Jan 23, 2019 at 10:30 AM
Updated on Jan 23, 2019 at 10:30 AM

Dating services stock Match Group Inc (NASDAQ:MTCH) has broken out of a technical downtrend, and now sits above its second-quarter highs from 2018. The shares recently pulled back to their 10-month moving average, a trendline with historically bullish implications. More specifically, two prior pullbacks to this support level have yielded average returns of 22% over four weeks and 30% over three months, with all of the returns positive. With this in mind, we feel it's time for a bullish play on MTCH.

WKEND Stock Chart MTCH

 

Despite the stock adding 13% in 2019 and 61% year-over-year, analysts remain skeptical toward MTCH. In fact, 43% of the brokerage firms following the security maintain tepid “hold” opinions. Likewise, the consensus 12-month price target on the shares stands at $50.24 -- a premium of only 4% to the equity’s Friday close. A round of upgrades and price-target hikes could further propel the stock forward.

There is similar pessimism to be unwound in the options pits. Data from the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows Match Group with a 10-day put/call volume ratio of 1.84, showing that put buying has nearly doubled call buying. What's more, this ratio ranks in the 96th annual percentile, meaning puts have been bought to open relative to calls at a quicker-than-usual clip.

The equity's Schaeffer's Volatility Scorecard (SVS) sits at a lofty 85 out of a possible 100, meaning MTCH has handily exceeded options traders' volatility expectations in the past year -- a boon for would-be premium buyers.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this MTCH commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.


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