Is Monster Really (or Finally) Going To Be Acquired?

Monster Worldwide, Inc. (NYSE: MWW) has been one of the ‘rumor mill’ merger candidates for months.  Some would argue that it has been a potential takeover candidate even longer.  The jobs posting website was one of the replacements for the newspaper industry’s weekly jobs postings, but now social media’s impact has acted as a catalyst which ultimately makes Monster’s business model look a bit dated.

So why are shares showing two big mystery gains in a row?

It was just yesterday mid-afternoon that shares made a mystery move from just under $6.80 to over $7.20 before closing at $7.10 on the day. The volume also spiked up to over 4 million shares for the day versus an average volume of about 2.4 million shares.  Now today’s move is up roughly 9% at $7.72 and the trading volume is nearing 6 million shares.

And the best part of all… there is no news.  Part of Monster’s gain is almost certainly tied to a “monster” short interest as the latest short interest is a whopping 23.42 million shares.  That was more than 7 days-to-cover.

What is interesting is that the move is coinciding with major options volume.  There have been over 5,300 of the SEPTEMBER $8 calls versus an open interest of 9,814 contracts. We have also seen SEPTEMBER calls active with almost 2,200 contracts traded in the $9 calls and even over 1,100 contracts in the $10 strike price.  Those same strike prices on a combined basis have also traded nearly 5,000 contracts in the OCTOBER call options.

Analysts are not looking for any major growth out of Monster if the Thomson Reuters consensus is hit.  Earnings were $0.37 EPS last year, and this year’s consensus is $0.20 EPS and next year’s is $0.29 EPS.  Revenues are anticipated to be down by 9% in 2012 to $949.4 million and next year is expected to tick up less than 1% to almost $951.2 million.

This feels like one of those situations where there is a rumor of an ongoing rumor. Just keep in mind that Monster Worldwide saw its shares rise from under $7 to just over $10 back in March when the company expressed some interest in being sold.  LinkedIn Corporation (NYSE: LNKD) was also a rumored buyer at one point back in May.

JON C. OGG