After-Hours Market Sells off The Meet Group Inc (NASDAQ:MEET)


Meet Group Inc (NASDAQ:MEET)

Shares of The Meet Group Inc (NASDAQ:MEET) are down over 12% in the after-hours market after the company released Q3 financial results that missed Wall St. expectations. The consensus EPS forecast was for$0.06 EPS, but the company came in at half that, $0.03 on total revenues of $32.2 million. Adjusted EBITDA was $8.9 million, up 30% year over year, or a 28% margin. Non-GAAP net income of $8.1 million, or $0.11 per diluted share, compared to $6.2 million or $0.10 per diluted share in the prior year quarter. Cash and cash equivalents totaled $24.6 million.

The Meet Group Inc (NASDAQ:MEET)

David Clark, Chief Financial Officer, stated, “Our mobile revenue growth of 47% year over year reflects increases in our mobile impressions through the acquisitions of Skout and Tagged. Adjusted EBITDA increased 30% to $8.9 million for the quarter, representing a 28% adjusted EBITDA margin. We generated $6.0 million in cash from operations, ending the quarter with $24.6 million cash and cash equivalents.”

The Meet Group Inc (NASDAQ:MEET) owns a portfolio of mobile apps designed to meet today’s communication challenges. Their Apps include MeetMe®, LOVOO®, Skout®, Tagged®, and Hi5®. They have users in over 100 countries. The Meet Group has over 4.5 million mobile daily active users. The company offers advertisers the opportunity to reach customers on a global scale and has mobile monetization strategies that include advertising, in-app purchases, and subscription products.

MEET Q4 and Full-Year Outlook

The company expects Q4 revenue in the range of $36.5 million to $38 million, and adjusted EBITDA in the range of $7.5 million to $9.5 million. For the full year, 2017, the company believes revenue will be in the range of $120.1 million to $121.6 million, and adjusted EBITDA will be in the range of $28.6 million to $30.6 million.

MEET Stock Performance

Two investment firms follow The Meet Group Inc (NASDAQ:MEET) and both rate their shares as a “Strong Buy”, with a consensus, one-year price target of $7.81. That is above the company’s 52-week high of $6.45. In May, investors began abandoning the stock when fears arose that its growth rate, while impressive, was not sustainable. Since then, it recently hit its 52-week low of $3.29.

MEET stock is down over 30% for the year and year-to-date. The loss of value is surprising given that sales have increased each year since 2013 when the company reported a figure of $40.4 million. Last year the figure was a robust $76.1 million. Earnings have a similar upward trajectory. In 2013 the company reported an EPS loss of (-$0.29) but by 2016 that had become a per share profit of $0.89.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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