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August 8, 2016 Stock Pick ► MeetMe, Inc. (MEET)

Stock Price: $7.37

MeetMe, Inc. is a social network company that owns and app, that facilitates interactions among users and encourages users to connect with each other.

MEET is a middle-tier social network company, trading at a $351 million market cap, not on the level of Facebook of course, but MeetMe is established in its own right and a solid, growing company.

Last year, MEET had revenue of $56.90 million with a profit of $5.96 million. Revenue last quarter (March 31) came in at $13.32 million with a profit of $2.35 million. MEET is cash flow positive with cash flow growing to $7.11 million last quarter. As of last quarter, cash and cash equivalents on the balance sheet was $26.41 million with total current assets exceeding total current liabilities (the quick ratio) by almost 8 to 1.

MEET trades at a PE of just below 11, which significantly undervalues MEET considering the company has shown it can monetize its social network effectively. Moreover, in late June, MeetMe announced that they acquired the mobile app known as Skout for $28.5 million in cash and approx. 5.37 million shares. Skout looks to be about as popular as MeetMe with Skout generating funding from Andreessen Horowitz at one point. When earnings are released soon by MEET, investors will see what the new balance sheet looks like, but the deal was done with minimal dilution with slightly more than half of the deal done in cash.

Through Skout, MeetMe CEO, Geoff Cook stated that the combination of the two companies "provides a pathway to $100 million in revenue in 2018." The combination of MeetMe and Skout could lead to 8.5 million in monthly active users.

In a way, MEET is like a mini-Match, see Match Group, Inc. (MTCH) stock pick, in the making with MEET trading 11 times less than MTCH. MEET has continue to reach new 52-week highs, trending from under $3.00 in April to $7.37 currently. This company is slim and trim and has great leadership under Geoff Cook, who has shown the ambition it takes to grow in the social network space.

Speculative Score: 1

1 Being the Least Speculative and Most Confident

10 Being the Most Speculative and Possibly the Most Risky

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