In competitive sports, you take what your opponent gives you. And if your opponent happens to shoot itself in the foot, so be it. In a questionable consumer economy where every dollar counts, an enterprise that’s granted an unexpected opening should attack with vigor. That’s the situation dating service Match Group (MTCH) finds itself in. Even better, options traders may be anticipating good tidings soon for MTCH stock.
Fundamentally, Match – despite the challenges facing the discretionary services sector – benefits from a fortuitous framework. Following the initial impact of the COVID-19 crisis, multiple jurisdictions made the tough but arguably necessary decision to severely restrict non-essential activities. Inevitably, the subsequent social isolation sparked loneliness, turning into a mental health concern for many individuals. For others, pent-up demand brewed for normal social activities.
Of course, meeting that special someone represents a critical component of the human experience. Therefore, in much the same way that the revenge travel phenomenon lifted the tourism industry because of pent-up demand, the same concept will likely apply to the dating services sector.
Obviously, the space features intense competition. Still, rumblings in the derivatives market suggests that the smart money expects encouraging movements from Match, which will soon report its results for the second quarter. Therefore, MTCH stock deserves a spot on your watch list.
Options Traders See Opportunity in MTCH Stock
Typically, an examination of Barchart’s screener for unusual stock options volume provides important clues to what professional traders may be doing with their money. It’s not a perfect indicator to be sure. However, the screener may tip retail investors about possible big moves ahead.
Following the close of the July 28 session, MTCH options saw total volume reach 13,994 contracts against an open interest reading of 197,783. Further, the delta between the Friday session volume and the trailing one-month average metric came out to 64.71%.
Moving down the information column, call volume hit 13,228 contracts against put volume of only 766. This pairing yielded a put/call volume ratio of 0.06, dramatically favoring the bulls. Notably, Barchart’s main page for MTCH stock shows the put/call open interest ratio at 0.88, which may be somewhat bearish. Practically speaking, the delineation between optimism and pessimism is 0.70X based on the upward bias of the market.
Still, the overall assessment for Match appears positive. On the open market side, the Barchart Technical Opinion indicator pegs MTCH stock as a 72% strong buy, predicting that in the near term, MTCH can maintain its current direction. That’s a positive for speculators considering that in the trailing month, shares gained nearly 9%.
As for expert opinion, here too, love is in the air. Among 22 analysts, 13 rate MTCH stock a strong buy and two rate it a moderate buy. Only seven believe it’s a hold and significantly no one views shares as a sell. Also, it’s worth pointing out that the median price target lands at $52.65, implying over 15% upside potential. Also, the high-side target runs to $95, implying over 108% growth.
On Tuesday, Aug. 1, Match will publish its Q2 results while management will webcast a conference call the next day. Specifically, analysts expect revenue to hit $813.67 million, indicating 2.41% growth from the year-ago quarter. Also, experts project that earnings per share will land at 45 cents.
Fundamentally, these may be realistic targets; hence, the confidence among options traders.
Consumers Make Up for Lost Time
A primary catalyst for MTCH stock has got to be the combination of pent-up demand and a still-resilient labor market. True, economic conditions are becoming questionable amid the Federal Reserve raising interest rates again. Still, the labor force overall has been strong. Further, because of the security that a tight labor market provides, Americans have demonstrated willingness to spend when incentives or opportunities arise.
And this point somewhat segues into the competitive argument for MTCH stock. One of Match’s main rivals is Bumble (BMBL), which offers a unique framework. Rather than men making the first move, women (in traditionally oriented settings) must initiate first contact. According to the company, this arrangement fosters power parity between the sexes in relationships, part of the broader Bumble ethos.
However, the problem with this decision is that it may alienate male users. After a while, men may lose interest waiting for a lady to contact them. In turn, they may seek other platforms – hello Match! – that don’t impose such a constraint. In a way, potential frustrations with Bumble may lead to organic sales and earnings growth for Match.
What’s more, consumers will spend, as demonstrated above. It’s just that they want to get the most bang for their buck with inflation being such a problem. Comparing the two, Match offers greater value because male users can reach out to female members without restriction. Therefore, in my opinion, both traders and investors have justification for their optimism in MTCH stock.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
