Unusual Options Activity In Match Group

Match Group, Inc. provides dating products worldwide. It operates a portfolio of brands, including Tinder, Match, PlentyOfFish, Meetic, OkCupid, OurTime, Pairs, and Hinge, as well as other brands. Match Group, Inc. offers its dating products through its applications and Websites in approximately 40 languages.

It was less than a year ago, Match was the largest short on the Russell 2000 index with nearly 60% of its shares sold short. I think part of the issue was the Federal Trade Commission (FTC) had sued Match Group, claiming the company unfairly exposed consumers to the risk of fraud and engaged in other allegedly deceptive and unfair practices. The suit claimed that the company was sending notifications to entice unsubscribed users when Match knew the messages were coming from accounts already flagged as potentially fraudulent.

But then COVID-19 kicked into full gear. Did you know at the time, there were more swipes on Tinder on March 29 than any other day in the app’s history (over 3 billion)? All of a sudden, users began messaging each other 2% more frequently, with the average conversation lasting 25% longer, according to the company. And then when countries started locking down their borders and shelter in place mandates were enforced, Tinder briefly allowed users to access a paid feature where you could set your location anywhere in the world. It was such a hit that the company launched Global Mode, where users are served potential partners from all over the world, regardless of where they live.

In New York, the epicenter of the COVID-19 outbreak in the U.S., the city’s health department put out a set of guidelines entitled, “Sex and coronavirus disease.” One piece of official advice: “You are your safest sex partner.”

Dating is hard enough in the best of times. Throw in government directives like this, plus nationwide social distancing mandates, and a highly contagious virus for which there’s no cure or vaccine, and you would expect the search for love to be the last thing on everyone’s mind. But dating is thriving.

“I have literally four dates planned tonight,” said Serena Kerrigan, a 26-year-old New York single and Creative Director. “There’s no dealing with the logistics. Who’s going to split the bill? Are you going to kiss me after the date? There’s so many different things that are very distracting.”

When Match reported earnings two months ago, earnings and revenue exceeded expectations due to Tinder mobile app subscriber growth. At the time, the company said it had 6.2 million paid Tinder dating app subscribers as of June 30 vs. 6 million in the first quarter, indicating it added roughly 200,000 in the quarter.

Two weeks ago, Morgan Stanley analyst Lauren Cassel says Wall Street underappreciates Match's emerging brands, including Hinge, which she expects to reach 8.4 million users by 2030 with average revenue per user of $29 a month and raised her price target to $151.

The Smart Money isn’t buying the story as I noticed unusual bearish options activity today. The Smart Money bought over 16,000 put options at the $90 strike price, that expire on Oct 16th.

Now I couldn't find any news that could give me any clues as to the bearishness on the stock, but that's why I'm not the Smart Money. However, if the Smart Money is going to be right, price must first get through the daily demand at $101.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

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