Investors didn't buy into the idea of Quepasa (AMEX: QPSA) as the Facebook of Latin America, so now let's see whether it wins over more believers as a larger social player.

Quepasa is acquiring Insider Guides in a $100 million deal that nearly matched Quepasa's $112 million market cap at the time of the deal. Quepasa will pay $18 million and issue $82 million in new shares to complete the transaction. Investors don't seem to mind the use of shares as currency, as the stock was trading up 32% late in the day.

Insider Guides is essentially myYearbook, a popular social site that leans on casual games and its virtual currency to turn strangers into online acquaintances. This deal will transform Quepasa from a thin social-networking site into a more diversified Web 2.0 company.

I was critical of Quepasa's valuation when it was trading as a $220 million company earlier this year. The engagement wasn't there, given the puny number of page views it was serving up relative to its cumulative base of registered users. Things didn't get any better in its latest quarter, when most of the merely $2.2 million it delivered in profitless revenue came through an advertising deal with a sponsor affiliated with one of its board members.

Quepasa tried to portray itself to stateside investors as the social-networking hub of choice for Latin Americans, but that storyline resonated only with those who were unaware of Telefonica's (NYSE: TEF) Tuenti or Google's (Nasdaq: GOOG) success in Brazil with Orkut. The engagement just wasn't there for Quepasa, and that became evident when the stickier LinkedIn (NYSE: LNKD) and Renren (NYSE: RENN) came public with the kind of metrics that are worthy of the niche's stickiness.

This will be a transformative deal for Quepasa. The company posted revenue just shy of $6.1 million last year, matching its operating loss. Insider Guides' myYearbook, on the other hands, generated $4.9 million in EBITDA as revenue climbed 53% to $23.7 million.

This doesn't mean myYearbook is getting hosed. It was probably too small to go public on its own, even with investors clamoring for the IPOs of Zynga and, eventually, Facebook. The emphasis on teens and young adults at myYearbook is also a tough area to monetize, though the company appears to be doing just fine financially.

I went to sleep last night as a bear on Quepasa. I woke up in an entirely different frame of mind in assessing an entirely different company today. I'm not a full-on believer, but I do feel bullish horns starting to protrude from my head. 

Is Quepasa a long or a short at this point? Share your thoughts in the comments box below.

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Longtime Fool contributor Rick Munarriz is Hispanic, but he isn't drawn to Quepasa.com as a social-networking site. He owns none of the stocks in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.