Will A New Video Product Lift MeetMe's FY 2017 Outlook?

Blake Harper of Loop Capital expects better fourth-quarter results from MeetMe Inc MEET on March 6, driven by progressively higher mobile ad rates through the quarter. However, the analyst sees a conservative guidance for 2017.

Analyst's Expectations For Q4

Harper sees fourth-quarter revenues of $29.1 million, above the company guidance range of $27.5 million–$29 million and EBITDA of $13.3 million (at the high end of its guidance range of $11.5 million–$13.5 million).

Although the analyst expects MeetMe and Skout to have set a combined record daily revenue rate in December, he projects a decline in mobile average revenue per daily user due to the international mix shift from Skout and new monetization of MeetMe's international users.

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Meanwhile, the company will launch a new video product by the end of first quarter that is expected to be the next user engagement and monetization catalyst.

“The video content will be user generated and should gain adoption as many social media users are creating more video for communicating. We expect the company to continue to quickly follow and capitalize on industry trends to increase engagement on its platform,” Harper wrote in a note.

Staying At A Buy

Harper sees potential upside from the new video product and product upgrades, which is expected to drive DAUs and engagement higher.

Harper maintains his Buy rating and $9 price target.

At last check, shares of MeetMe were down 0.41 percent to $4.81.