In a 13D filing (Event Date 03/17/2017, Filed as of Date 03/27/2017) on MEETME (NASDAQ: MEET), hedge fund Harvest Capital Strategies LLC disclosed a 6%, or 4,000,000 share, stake in the company. Other notable shareholders are Dimensional Fund Advisors owning 4.065 million shares, Prospect Capital Advisors owning a total of 2.012 million shares and Lyon Street Capital owning 780k shares.

MeetMe has completed an underwritten public offering of 8,000,000 shares of its common stock at a public offering price of $5.00 per share. Just $5.00 per share. This was a 16% discount to where shares were trading before the announcement of the public offering.

What analysts are saying: There’s nothing wrong with acquiring other companies so that a company can shore up its business or expand services. But MeetMe is a young company that appears to be growing quickly mainly through its acquisitions, and that’s problematic.

Back in October, the company purchased one of its rivals, Skout, that helped bump MeetMe’s total active users up from about 5 million to 8.5 million — an instant user increase of about 70%. Tinder currently has 50 million active users, compared to MeetMe’s 8.5 million, and Tinder users check their app 11 times per day and spend 90 minutes on it every single day. Those stats are a huge hurdle that MeetMe isn’t likely to overcome any time soon.

Investors considering MeetMe stock should watch two key metrics closely as the company grows: monthly active users (MAUs) and average revenue per user (ARPU).

MeetMe by the numbers: For the quarter ended December 31, 2016 MeetMe mobile revenue increased by 20% and MeetMe mobile ARPDAU increased by 6% to $20.6 million and $0.180, respectively, for the quarter ended December 31, 2016 from $17.2 million and $0.169, respectively, for the quarter ended December 31, 2015. Our mobile revenue increased by 126% and our mobile ARPDAU by 89% to $17.2 million and $0.169, respectively, for the quarter ended December 31, 2015 from $7.60 million and $0.089, respectively, for the quarter ended December 31, 2014. For the quarter ended December 31, 2016, Skout mobile revenue was $7.2 million, and Skout mobile ARPDAU was $0.102.

In the quarter ended December 31, 2016, MeetMe earned an average of $0.25 ARPU on the web and $4.11 in ARPU in our mobile applications, as compared to $0.87 in web ARPU and $4.22 in mobile ARPU for the quarter ended December 31, 2015. In the quarter ended December 31, 2016, MeetMe earned an average of $0.039 in web ARPDAU and $0.180 in mobile ARPDAU, as compared to $0.106 in web ARPDAU and $0.169 in mobile ARPDAU for the quarter ended December 31, 2015. Skout mobile ARPU was $2.21 and mobile ARPDAU was $0.102 for the quarter ended December 31, 2016.

Management Commentary: Historically, we have grown our user base in large part through organic, viral channels. By encouraging members to invite their friends to join MeetMe and to share their activity across other external platforms, including Facebook and Twitter, and by providing members with easy-to-use tools, we believe we have successfully grown our user base while minimizing marketing costs. We focus primarily on creating a truly differentiated experience and compelling value proposition for new users in our markets and developing the technologies needed to facilitate their word-of-mouth marketing on our behalf in order to attract and retain new members.

Our paid customer acquisition strategy continues to focus on both acquiring users in new geographies where the active user base on the Company’s mobile apps had previously been small in comparison to our user base in the U.S. and Canada. We spent $12.1 million, $3.3 million and $2.0 million on paid direct user acquisition in 2016, 2015 and 2014, or 15.9%, 5.9% and 4.5% of our total revenue, respectively. Of the $12.1 million spent in 2016, $10.2 million was spent on user acquisition for MeetMe and $1.9 million was spent on user acquisition for Skout. As mobile ARPU has increased over the last few years, we believe it has made sense to increase our marketing spend. We plan to increase the overall Company spend rate in 2017 to approximately 20% of revenue.

We face additional risks as a result of our acquisition of Skout and may be unable to integrate our businesses successfully and realize the anticipated synergies and related benefits of the acquisition or do so within the anticipated time-frame. The process of integrating Skout’s operations into our operations could result in unforeseen operating difficulties and require significant resources.