Image source: IAC.
What: Shares of online-dating service extraordinaire Match Group (MTCH) were a popular match for investor today, climbing 11.5% on little news.
So what: Shares of the parent of popular dating sites such as Tinder, Match.com, and OkCupid started breaking out around 2:30 p.m. ET this afternoon. Volume began spiking as well as the session finished, with 2.55 million shares traded, more than double the daily average as the recent IPO approached an all-time high.
With no news out on the company today, the most likely explanation for the surge is a short squeeze. As of May 13, nearly a third of the stock had been sold short, and with the stock already near an all-time high before this afternoon's breakout, the shorts seemed to jump in to cover their losing bets.
Now what: Since its debut last November, the stock has been a popular pick among short sellers, as IPOs are frequent targets of shorts since post-IPO euphoria can often yield to a quick sell-off. Match shares lost about 40% of their value during their first few months of trading but have gained it all back since, tracking with the market's recovery since February.
Goldman Sachs is among the stock's naysayers, slapping a sell rating on it and a price target at $12, and also said that online dating sites have limited growth opportunities.
Match, however, appeared to prove the investment bank wrong in its latest quarterly report, with revenue up 21%, paid members up 36%, and 30% growth in adjusted net income. Long-term opportunities for the company include international and increased use of its sites as an advertising platform. The company's forward P/E of just 16 makes the stock much more affordable than the usual tech IPO.
After today's jump, the shorts may have finally been smoked out.
