Trade at first sight
- Dating apps MTCH, BMBL release earnings next week
- Both stocks hit new 2023 lows on Wednesday
- High call-put ratio in BMBL on Thursday
Traders and investors focused on the Big Tech earnings currently hitting the Street may be unaware that another industry is getting ready for its highest-profile companies to announce their numbers: dating apps. Match Group (MTCH) and Bumble (BMBL) are scheduled to post quarterly results on May 2 and May 4, respectively, following a rough stretch of trading for both stocks, which are trading near multi-year or all-time lows.
Morgan Stanley analysts recently discussed the dating app industry’s drop in user (and revenue) growth over the past few quarters, possibly a result of perceptions that the industry is becoming saturated. But the analysts also see the potential for longer-term growth in the dating app industry as it pivots from focusing on expanding its user base to increasing the monetization of that base.1
A week before its earnings release, BMBL had a higher-than-average call-put ratio, with roughly 19 calls trading for every put. The biggest trade was 1,500 contracts in the May $20 calls—a strike price roughly 14% above where the stock was trading around midday ($17.50):
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
The options chain also shows the majority of BMBL’s call open interest (OI) was clustered around this strike, with a total of 15,300 open positions in the May $17.50–$30 options. That may sound like a fairly hefty number, but the bottom half of the screen shows there were even more open put positions (33,700) in the out-of-the-money $15 and $12.5 strikes. (For reference BMBL, which began trading 2021, has gained ground on six of its nine earnings days, with an average return of +/-10.9%. MTCH has rallied on 17 of its past 29 earnings days, with an average return of +/-6.6%.)
Meanwhile, BMBL and MTCH both rallied at least 5% intraday on Thursday—one day after hitting fresh year-to-date lows. The stocks, which sold off more than 38% from their late-January and early-February highs after starting the year with 30%-plus rallies, have tracked each other closely all year:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
As steep as these latest downturns may look, they’re only the latest legs of the 70%-plus corrections both stocks have experienced since their 2021 highs.
It’s impossible to know when a stock has bottomed or topped. On Thursday, the options market was estimating a +/-8.7% earnings move for BMBL and a +/-9% move for MTCH. Whether or not those estimates mesh with reality—or push the stocks to fresh lows or contribute to reversals if they do—remains to be seen.
Market Mover Update: June WTI crude oil (CLM3) posted a small gain after Wednesday’s sell-off, but Patterson-UTI Energy (PTEN) reversed an early rally and fell more than 5% intraday (see “Traders drill down on energy options”).
Today’s numbers include (all times ET): Personal Income and Outlays (8:30 a.m.), Employment Cost Index (8:30 a.m.), PCE Price Index (8:30 a.m.), Chicago PMI (9:45 a.m.), Consumer Sentiment (10 a.m.).
Today’s earnings include: Colgate-Palmolive (CL), Chevron (CVX), Exxon Mobil (XOM).
Click here to log on to your account or learn more about E*TRADE's trading platforms, or follow the Company on Twitter, @ETRADE, for useful trading and investing insights.
1 MorganStanley.com. Why Investors Might Still Swipe Right for Dating Apps. 4/20/23.