Match Group (NASDAQ: MTCH) Stock is a Sticky Pandemic Play

Shares of online dating platforms aggregator Match Group NASDAQ: MTCH have benefitted from the isolation mandates triggered by the COVID-19 pandemic. Humans are naturally social creatures that crave social connections and interactions. Match Group platforms including Tinder, Match.com, OkCupid.com, Ourtime.com, and PlentyOfFish.com dating apps are available globally in over 40 languages. The need for companionship during isolation is a natural urge that Match Group accommodates. Shares have been on a tear outperforming S&P 500 index NYSEARCA: SPY as it continues to high new all-time highs. Risk-tolerant investors should not be chasing these highs but patiently monitor the price action for inevitable opportunistic pullback entries.

Q1 2020 Earnings Release

On May 5, 2020, Match Group released Q1 2020 results for the quarter ending in March 31, 2020. The Company reported earnings of $0.55 per share versus $0.41 per share consensus analyst estimates, beating by $0.14 per share. Revenues grew 17.3% year-over-year (YoY) to $544.6 million but missed analyst estimates of $545.02 million. Subscribers surged to 9.9 million users from 8.6 million, up 15% YoY, and average revenue per user (ARPU) growth of $0.01 to $0.59. Tinder Direct revenues grew 31% YoY driven by 28% subscriber growth to 6 million users and 2% ARPU growth. Tinder fueled the majority of the growth Internationally and in North America followed by Hinge and Pairs. The Company completed a $500 million private offering on 4.125% Senior Notes due 2030, on Feb. 11, 2020.

Effects of COVID-19

The novel coronavirus outbreak causes most Match Group employees to work from home. Global isolation mandates caused a surge in user growth, higher engagements through virtual connections, and acceptance of platform video chat for dating. Ironically, there was a lower level of new user sign-ups and propensity to pay but levels vary by age and geography (older demographics and harder hit COVID-19 areas). The Company saw more activity among the under 30 age group with more matching and engaging in longer conversations. The average number of daily messages across all products grew 27% higher than the last week of February 2020. The Company expects Q2 EBITDA to be flat YoY, however, every brand saw YoY growth in April 2020.

One-on-One Live Video Chat and Dating

While video has been available since 2011, the one-on-one live video chatting is finally seeing adoption as stay-at-home mandates literally force users to test it out and seeing benefits. The rollout of one-on-one video capabilities across all platforms will leverage growth as live video icebreakers, chats and dating galvanizes the one-one-one experience, especially during these times. The Company expects this to be sticky even post-pandemic as relationships seem to accelerate quicker using this channel.

Separation Agreement

Match Group will complete the separation from parent company IAC/Interactive Corp NASDAQ: IAC and its remaining businesses effective after the close on June 30, 2020. IAC is a global media and internet platform aggregator that operates internet, mobile, and cloud content properties and applications like Vimeo, Angie’s List, HomeAdvisor, and numerous popular content sites. Shares have run up into the separation so pullback opportunities may arise with a sell-the-news event type retracement.

Match Group NASDAQ: MTCH Opportunistic Price Levels

Using the rifle charts on monthly, weekly, and daily time frames provides a broader view of the landscape for MTCH stock. The shares are not cheap and setting up a perfect storm breakout for a potential exhaustion peak for pullback opportunities. The weekly rifle chart formed its first market structure low (MSL) above $68.79 followed by daily MSL trigger above the $88.57 Fibonacci (fib) level.

The daily market structure high (MSH) triggers under $93.58. The weekly and daily stochastic both have bullish mini pups signaling moves to their upper Bollinger Band (BBs) at $110.60 and $105.25, respectively. This can often be a climactic peak area to watch on heavy volume for eventual pullbacks. A daily stochastic cross down would be needed to get the deeper opportunistic pullback levels at $92.57 weekly 5-period moving average (MA)/fib, $85.47 weekly MSH trigger and $80.76 on the overlapping 3.618 fib/weekly 15-pd MA and daily lower BBs. This one is still in an upward trajectory so investors will have to remain patient. Nimble traders could take entries on pullbacks to the $98.82 daily 5-pd MA support for a bounce towards the daily upper BBs trajectory levels. Taking entries ahead of deeper pullbacks requires keeping stop losses in check.