MeetMe Down Significantly in Pre-Market After Proposed Common Stock Offering

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MeetMe, Inc. (NASDAQ: MEET) shares traded over 10% below its previous day’s closing price, during the pre-market. The stock hit a pre-market low of $5.20, and shares could fall further after its proposed common stock offering. According to Morningstar, the stock has been up over 20% over the past five trading sessions, as of March 9, 2017. Moreover, the stock was up 23.88% over the past month.

Here’s a look at MeetMe’s stock performance:

MeetMe

Source: TradingView

MeetMe is one of the market leaders for social discovery, and owns and operates a social network. The company’s social network allows users to meet new people on the web and mobile platforms, in the U.S.

The company did not disclose the offering size in its filing, adding some uncertainty to the name. Since MeetMe did not disclose this information, traders can’t properly determine the proposed public offering’s dilutive measure.

MeetMe Proposed Public Offering

On March 9, 2017, after the market close, MeetMe proposed a public common stock offering. MeetMe expects to grant underwriters a 30-day option to purchase up to an additional 15% of the shares of common stock offered in the public offering to cover allotments. Canaccord Genuity and Roth Capital Partners are the joint book runners and Northland Securities is the co-manager.

In the company’s SEC Form 424B3 Filing, under the use of proceeds section, it intends to use the net proceeds for generally corporate purposes. Moreover, it intends to use the net proceeds for working capital, and potentially to fund a portion for the pending acquisition and any other future acquisitions. Now, the proposed public offering is being made pursuant to an effective registration statement.

In the filing, the company noted, “The number of shares of our common stock to be outstanding immediately after the closing of this offering is based on 58,945,607 shares of common stock outstanding as of December 31, 2016…”

According to the filing, this excludes 675K common stock shares issuable upon the exercise of outstanding warrants and 6.446M common stock shares issuable upon the exercise of outstanding stock options. Additionally, it excludes 1.79M shares of common stock under unvested restricted stock awards and 4.549M common stock shares available for future grant under our 2012 Omnibus Incentive Plan and our 2016 Inducement Omnibus Incentive Plan.

MeetMe SEC Form S-3MEF

The company filed an SEC Form S-3MEF, “indicating registration of up to an additional 20% of securities for any offering registered on a S-3,” according to EDGAR. The company is an accelerated filer, since it has over $75 million, but less than $700 million, in public float. MeetMe had a market cap of $342M, as of the close on March 9, 2017.

In the filing, the common stock, par value of $0.001 per share, was to be registered. Now, the amount to be registered in this filing was $7.7M, and the proposed maximum aggregate offering price was $7.7M.

According to the SEC Form S-3MEF, “The Registrant previously registered an aggregate principal amount of $50,000,000 of Common Stock, Preferred Stock, Warrants and Units on the Registration Statement on Form S-3.”

The Bottom Line

It’s still unclear how much the company would dilute the company’s common stock with the proposed public offering. MEET shares traded down over 12% at one point during pre-market hours. This may indicate traders are taking off some risk, since the size of the offering is unknown, for now.

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