The Meet Group (MEET) has reported earnings and shares are getting smashed. In this column we present the highlights and offer commentary on WHY things are so dire.

Meet Group’s Fourth Quarter 2017 Financial Highlights

• Total revenue of $40.1 million, up 37% year over year
• Mobile revenue of $32.0 million, up 15% year over year
• GAAP net loss of $67.7 million, or $0.94 per diluted share primarily as a result of a non-cash asset impairment charge and deferred tax charge of $56.4 million and $7.7 million, respectively, compared to GAAP net income of $9.9 million, or $0.15 per diluted share in the prior year quarter
• Adjusted EBITDA of $10.5 million, compared to $12.8 million in the prior year quarter
• Non-GAAP net income of $9.5 million, or $0.12 per diluted share, compared to $12.4 million or $0.19 per diluted share in the prior year quarter

Full Year 2017 Financial Highlights

• Total revenue of $123.8 million, up 63% year over year
• Mobile revenue of $97.8 million, up 38% year over year
• GAAP net loss of $64.2 million, or $0.93 per diluted share primarily as a result of a non-cash asset impairment charge and deferred tax charge of $56.4 million and $7.7 million, respectively, compared to GAAP net income of $46.3 million, or $0.80 per diluted share in the prior year
• Adjusted EBITDA of $31.6 million, up 8% year over year, or a 26% margin
• Non-GAAP net income of $28.5 million, or $0.39 per diluted share, compared to $26.9 million or $0.47 per diluted share in the prior year

So why is Meet Group stock tanking?

Well it was a an interesting MEET quarter. Its getting smashed thanks to financial engineering.

What do we mean? Well, Advertising revenue guided to ~$58m in 2018. MeetMe did ~$65.5m of ad revenue by itself in 2016. Add on Skout + If(we) + Lovoo ad based revenue, put it in a blender, and its less than MeetMe did as a standalone entity in 2016.

They ran into an industry buzz saw. They just guided to 90% GM revenue decreasing by ~40% yoy in 2018. $30m of If(we) non-ad revs were shrinking ~20% when they bought it. EBITDA would have decreased in 2017 yoy were it not for a change in depreciation and amort (increased $7.5m yoy in 2017) and stock based comp (increased 4.9m yoy in 2017).

Were it not for these rather aggressive increases, MeetMe aEBITDA would have been $14.8m in 2017. Financial engineering was done to show ebitda growth, and the Street has caught on. We would now avoid the name