I don’t envy Lidiane Jones. The CEO of dating app Bumble (BMBL) took over the helm from company founder Whitney Wolfe Herd. As you probably know, Herd represents a new generation of entrepreneurs: smart, talented, driven and female. Full credit to Herd, she never waited around for society to implement equity and inclusion. She muscled her way in and took it.
If the valuation of BMBL stock was based purely on moxie, it would be a unanimous strong buy. As it stands, the Barchart Technical Opinion – which measures sentiment based on a range of charting data – pegs Bumble as a “strong sell.” It’s difficult to argue with the logic. Just this year alone, shares stumbled more than 27%.
However, Jones has an idea – something that I’ve been pounding the table on. While Bumble is a popular platform, its directive to empower women by forcing female users to make the first move (in traditionally oriented relationships) has irked many people. However, that annoyance could be coming to an end soon.
In an interview with the New York Post, Jones remarked that “It’s obviously been our signature. But it feels like a burden for a subset of our customers today.”
Of course it’s a burden. I’m not sure why it took this long for the company to realize the problem. Frankly, it’s already difficult enough for morally upright and hardworking gentlemen to find a suitable partner. Denying them the ability to reach out to female members first means that only the choicest male candidates will receive any kind of engagement.
Guess what? Such men don’t need to be on Bumble. It’s no wonder, then, that options sentiment has picked up for BMBL stock, potentially in favor of the bulls.
Optimists Sense a Brewing Opportunity in BMBL Stock
Following the close last Friday, BMBL stock lit up the radar on Barchart’s unusual stock options volume screener. This dataset is particularly useful for retail investors as it shows where the smart money is directing its funds. For Bumble, total volume reached 52,998 contracts against an open interest reading of 226,228 contracts.
Notably, Friday’s volume shot up slightly over 530% against the trailing-month average metric. As well, call volume only mustered 468 contracts while put volume soared to 52,530. On paper, the put/call volume ratio stood at 112.24, which implies heavily bearish sentiment.
Still, to verify, investors should also consider the data from Barchart’s options flow screener. This nifty feature – the full function of which is available to Premier members – exclusively showcases big block transactions likely placed by institutions. Interestingly, options featuring bullish sentiment outnumbered options with bearish sentiment.
To corroborate the findings, I turned to Fintel’s options flow screener, which revealed the same theme. Among major transactions, the derivative contracts with bullish sentiment stood out. In particular, the selling of the May 10 ’24 8.50 Put stood out as a trade of interest.
On Friday, BMBL stock closed at $10.53. Unless shares fall below $8.50, investors should be able to collect maximum premium (or income) on the sold call. Looking at Barchart’s Trader’s Cheat Sheet, this transaction seems a shrewd one. Essentially, BMBL enjoys strong support from $10.44 down to $9.32. So, the bears would have to push through several lines of defense to panic out the optimists.
Fundamentals Might Save the Day for Bumble
Ordinarily, I would be cautious about BMBL stock, if not outright bearish. With Bumble’s directive effectively forcing women to make the first move, it’s unnecessarily shooting itself in the foot. You just don’t dictate to customers what they want. Rather, it’s the opposite.
It’s the customers that tell the business what they want to buy. If the enterprise doesn’t comply, it goes out of business. Simple as that. And unfortunately, Bumble’s social activism was getting in the way of profitability.Thankfully, it appears that Bumble’s new leadership recognizes the issue and is apparently ready to correct it. Fundamentally, the company has little choice but to respond. Back in the fourth quarter last year, the company printed a loss per share of 19 cents against an expected earnings target of 11 cents per share.
Clearly, the customers want something different out of Bumble. If Jones is truly serious about changing the company’s key flaw, BMBL stock could be a buy. Watch this space.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
