Unusual Options Activity: Bumble (BMBL)

Dating app Bumble (BMBL) is down 45 percent over the past year, and sank 15 percent following earnings earlier this week. One trader sees further weakness ahead for shares in the coming weeks.

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  • That’s based on the April $10 puts. With 48 days until expiration, 39,751 contracts traded compared to a prior open interest of 1,067 for a 37-fold rise in volume on the trade. The buyer of the puts paid $0.30 to make the bearish bet.

    The company has struggled operationally in the past year, reporting losses even as revenues rose by 13 percent.

    The dating app market is a rich one with low barriers to entry, and several other sites are popular, which draws potential attention elsewhere. Besides missing on earnings, the company announced layoffs.

    While layoffs can improve profitability in time, it’s also a sign that the company isn’t yet on a growth trajectory.

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  • Action to take: Shares are in a downtrend and the earnings report wasn’t a strong one.

    Interested investors will likely have a far better opportunity to buy shares when things are ready to turn around. For now, Bumble should be avoided.

    For traders, the April puts are well positioned for gains in the weeks ahead, as shares are likely to trend lower. Traders can likely see mid-double-digit gains on the option.


    Disclosure: The author of this article has no position in the company mentioned here, and does not intend to trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.

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