MeetMe, Inc. (NASDAQ:MEET) Rally Comes to an Abrupt End

[[tagnumber 0]]Shares of MeetMe, Inc. (NASDAQ:MEET) are taking the downturn again after they made an impressive rally at the end of last month. Yesterday, the company announced its app downloads reached a new milestone, however, as MEET recently lost a major part of its advertising business its stock is more likely to drop instead of surge up.[[tagnumber 1]][[tagnumber 2]] [[tagnumber 0]] [[tagnumber 2]] [[tagnumber 0]]MEET closed at $1.56 for a share yesterday after a small 0.64% loss from the previous close. The trading volume was even lower than in the previous sessions and just a small portion of the average number of traded shares. Last month, the previous press release by the company about a raise in the sales guidance triggered a strong rally, though yesterday‘s PR remained unnoticed.[[tagnumber 2]] [[tagnumber 0]] [[tagnumber 2]] [[tagnumber 0]]Technically, MEET stays in a bearish position and could easily tank below the 20–day moving average which served as support. That makes it a good shorting candidate for today, unless traders decide to trade on the announcement of MeetMe app surpassing 20 million downloads from the Google Play Store.[[tagnumber 2]] [[tagnumber 0]] [[tagnumber 2]] [[tagnumber 0]]In the last three quarters, MEET reported small positive net income and in this year‘s first quarter it ma[[tagnumber 14]]naged to cut down significantly the operating expenses. However, investors doubt in the company‘s potential to create future value for shareholders as the price–to–book and price–to–sales ration assigned to the stock are extremely low for that industry. In fact, the value ratio is even below 1, meaning longer–term value loss for MEET are to be expected.[[tagnumber 2]] [[tagnumber 0]] [[tagnumber 2]] [[tagnumber 0]]Concerns seem justified in any case. Last month, MEET had to terminate two contracts with its major advertising partner Beanstock Media, Inc. due to non–payment of amounts due under the contracts. According to the 8–K, more than half of the company‘s receivables, or $5.8 million, are owed by Beanstock. Losses will be huge for MEET as Beanstock had to pay for the entire desktop advertising space of MEET, as well as a certain potion of the company‘s mobile advertising inventory.[[tagnumber 2]]