Quepasa QPSA! rebrands as WHAT?

by Kris_Tuttle on April 3, 2012

For rea­sons we can’t begin to grasp Quepasa held a con­fer­ence call and pre­sen­ta­tion for ana­lysts and investors today to “unveil” their rebrand­ing strategy.

We admit that we are new to the story but from a dis­tance the old story at least made some sense. Span­ish speak­ing peo­ple are a big seg­ment of the world and it’s not unrea­son­able to think about hav­ing a social net­work and con­tent com­pany focused on it. (Yan­dex $YNDX is a good exam­ple of a regional com­pany that has done well and we like.)

But Quepasa decided to merge with MyYear­book and con­sol­i­date into some­thing new they are call­ing MeetMe. The ticker of the com­pany will be changed to $MEET. To be sure meet­ing sites like Badoo are pop­u­lar and based on most accounts extremely prof­itable. But nobody is kid­ding them­selves about what these sites are all about.

Unfor­tu­nately for Quepasa the “redesign” and inte­gra­tion cre­ates a giant spam/hookup site that few investors will want any­thing to do with. The con­sol­i­da­tion of the two looks more like FriendFinder $FNN then the com­pa­nies they are com­par­ing them­selves to (LinkedIn $LNKD, Face­book and Twitter.)

Strangely the com­pany fails to men­tion Meetup which is one of the few online sites that is in fact ded­i­cated to help­ing peo­ple con­nect, albeit around com­mon inter­ests, regions or events. There are some gaps in the online ser­vices that would help pro­mote more dis­cov­ery but this will be emerg­ing in mul­ti­ple forms from estab­lished com­pa­nies and third par­ties who will build that func­tion­al­ity along­side the large properties.

The real tragedy though is that the com­pany burned a rare oppor­tu­nity to actu­ally con­nect with long-term investors and prove their met­tle in terms of strate­gic think­ing, oper­at­ing exper­tise and hard and fast goals about prod­uct devel­op­ment, rev­enue growth, oper­at­ing mar­gins and returns on invested capital.

Their story went along the lines of “we have acquired this big prop­erty and put them together into some­thing that makes some sense and are big in terms of reg­is­tered users and page views.” Investors have seen ver­sions of that story before and know it doesn’t work. Demand Media $DMD is another spammy con­tent com­pany that proved that vol­ume does not equate to sus­tain­able growth and earn­ings in an increas­ingly fil­tered net.

At this point we don’t have enough to sug­gest we should build an IV model on the com­pany to see how the cur­rent mar­ket cap­i­tal­iza­tion stacks up to what they might be worth. It’s pos­si­ble that there is a bril­liant strat­egy lurk­ing around some­where in the mix but it’s not at all evi­dent from the infor­ma­tion we have reviewed. As far as we can tell MyYear­book looks like a dis­as­ter and the dilu­tion of what might have been an inter­est­ing niche story should be a dis­ap­point­ment to QPSA investors.

All in all another sur­pris­ing exam­ple of a com­pany that appears not to be get­ting any good advice on what investors expect or per­haps is not lis­ten­ing to it. Given the resources at their dis­posal they need to go back to the draw­ing board with good erasers and sharper pencils.

Fur­ther read­ing & references:

Com­pany pre­sen­ta­tion on the rebranding

Demand Media: Cash­ing in on Crapification

LinkedIn com­pany snap­shot from a year ago.

Dis­clo­sures:

This infor­ma­tion is pre­pared to illu­mi­nate but could be mate­ri­ally inac­cu­rate in places, omit impor­tant infor­ma­tion or be flat out wrong. It is not intended for invest­ment pur­poses. Research 2.0, their affil­i­ates and/or part­ners may have posi­tions in any of the stock men­tioned at any time. As of this writ­ing the author has no posi­tion in QPSA and has no knowl­edge of any affil­i­ate hav­ing a posi­tion. YNDX is owned in the IPO Candy Folio over which the author has author­ity and LNKD is owned in the Sound­View Tech­Fund which the author advises. Nobody has any oblig­a­tion to update this infor­ma­tion going forward.

{ 2 comments }

P Baker April 3, 2012 at 7:16 PM

Are you kidding me? MYB saved QPSA, which was dying. MYB brings in a young, active, mobile user base. To come up with your conclusions you’d have to ignore all of their reported metrics.

The CC was great today; this is the strategy that they’ve been moving towards for a while now. And, it was stated that Management didn’t see any need for a secondary… indicating that the MYB revs will be offsetting QPSA losses shortly.

They’ve been experiencing huge growth in both users and $$$. The new strategy plays to their strengths.

Kris_Tuttle April 4, 2012 at 1:13 PM

MYB looks like SPAM to me.

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