This Market Match Indicates Further Upside Ahead

Typically, a growing company will hit certain milestones in its career. The most important for getting onto the radar for investors is being included in a major index. Over time, companies that hit earnings and revenue goals may find they join more and more prominent indices.

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  • The S&P 500 has recently started rebalancing, taking a few companies out, but adding some new players as well, who are seeing their shares soar now.

    Case in point? Match Group (MTCH). The owner of Tinder, Hinge, and other dating apps, saw shares rise over 7.5 percent on news that they would be added to the widely-tracked S&P 500 index.

    The company has been growing in the mid-double digits for some time, and shares already rose 40 percent over the past year. Online dating trends are likely to remain strong as a way to socialize in the post-Covid world.

    Action to take: While shares are expensive at around 85 times current earnings, the company’s growth is likely to continue as the firm figures out better ways to monetize its apps. Growing users will likely continue to drive growth as well. That makes shares somewhat interesting here, as a way of playing an unusual social network.

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  • For traders, shares are moving higher, but are still well off their 52-week high. The January $170 calls, last going for around $11, are a reasonable play on shares moving higher here as the company joins the index and passive buyers keep adding to their holdings in the months ahead.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.