Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Latino-focused social network Quepasa
So what: The big jump today follows Quepasa's announcement that it's buying fellow social network myYearbook. Quepasa said myYearbook gets 1.2 billion page views on the Web each month and will nearly double Quepasa's user base. The company is paying $100 million for the purchase, with $82 million of that coming from new stock.
Now what: Wow, I'm not exactly sure what to make of this deal. Quepasa was a sub-$120 million company prior to today that is a clear also-ran (if that) in the social networking industry. Financially, it has only managed to lose money. And this company is spending $100 million on an acquisition? Color me skeptical.
That said, Quepasa shareholders may now end up owning a better social network in myYearbook. That company's revenue was $23.7 million in 2010 -- up 53% from the prior year -- and it managed $4.9 million in positive EBITDA. That compares with $6.1 million in revenue and a $5.7 million EBITDA loss for Quepasa in 2010.
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Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.
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