Trade at first sight

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):

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:

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).

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¹ MorganStanley.com. Why Investors Might Still Swipe Right for Dating Apps. 4/20/23.