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Why The Meet Group Declined 15% Wednesday Morning

By Daniel Miller - May 8, 2019 at 12:43PM

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Here are the key points from a solid first-quarter result and why the stock could be down Wednesday morning.

What happened?

Shares of The Meet Group ( MEET ), a portfolio of mobile social entertainment applications for consumers to meet and make connections, dropped as much as 15% Wednesday morning.

So what

Starting from the top, total revenue during the first quarter jumped 32% from the prior year to $49.5 million, topping analysts' estimates calling for $47.8 million. First-quarter adjusted earnings per share checked in at $0.09, which also topped analysts' estimates by $0.01 per share. Another bright spot in the results was strong growth in video: Video revenue topped $20 million, which was more than a fourfold increase from the prior year. Further, average video revenue per daily active video user increased from $0.18 during the fourth quarter to $0.26 during the first quarter.

Woman looking at a mobile dating app on her phone.

Image source: Getty Images.

"Operationally, we completed the rollout of Battles in the quarter, with the launch on Tagged and Lovoo, and we made good progress integrating our newly acquired Growlr app. We improved operating efficiency from the year ago quarter, growing adjusted EBITDA margin by 250 basis points," said Geoff Cook, CEO of The Meet Group, in a press release.

Now what

Part of the negativity surrounding the stock price today could be its revenue outlook: Management estimates second-quarter revenue between $50.3 million and $51.3 million, missing analysts' estimates of $51.2 million at the midpoint. The initial rollout of video helped drive growth in 2018, and management expects to drive more growth by reaching even more of its user base with video content in 2019. Over the next few quarters, the company will launch new features and interactive video formats including 1x1 live video, interactive games, and new shows, which are all aimed at driving user engagement and monetization higher.

Investors should take any daily stock price swings with a grain of salt; it was a solid quarterly result from The Meet Group, and even with the decline, the stock is still up 72% over the past year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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