Why MeetMe Inc. Stock Popped Today

What happened

Shares ofMeetMe(NASDAQ: MEET)were up 14% as of 11:45 a.m. EST Tuesday after the social media technology company announced an acquisition and better-than-expected fourth-quarter 2016 results.

So what

Quarterly revenue climbed 47% year over year, to $29.2 million, including 62% growth in mobile revenue, to $27.8 million. As fellow Fool Rick Munarriz previouslynotedwould be the case, this growth was driven primarily by MeetMe's $55 million cash-and-stock acquisition of Skout last October.On the bottom line, that translated to 56% growth in adjusted net income, to $12.4 million, or $0.19 per diluted share.

Analysts, on average, were only expecting adjusted net income of $0.16 per share on lower revenue of $28.8 million.


"We made tremendous progress on multiple fronts in 2016," added MeetMe CEO Geoff Cook. "We achieved record financial results for the year, reflecting the increasing value of our audience to mobile advertisers, as well as our growth in mobile engagement through product innovation and the acquisition of Skout."

In addition, MeetMe announced that it has executed a $60 million cash agreement to acquire If(we), Inc., another social and mobile technology company that owns the Tagged and hi5 brands. If(we) generated $44 million in revenue last year, including 56% growth in mobile revenue in the fourth quarter of 2016 alone.

Now what

MeetMe's latest acquisition will boost its global mobile monthly active user base to 10.6 million people, is expected to add at least $9 million to adjusted EBITDA this year, and should be accretive to earnings and free cash flow within the first 12 months after the transaction's expected close sometime in the second quarter of this year.

All things considered, this was a great quarter from MeetMe, and it's hard to argue with the rationale behind this complementary acquisition. With shares still down nearly 30% from their 52-week-high since peaking last August, it's no surprise to see investors aggressively bidding up MeetMe stock today.

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Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.