Is it Time to Buy Groupon Yet?
With shares trading near $10, down from the company's $20 IPO, it may just be time to consider investing in Groupon (NASDAQ: GRPN).
On Thursday, Formula Capital's James Altucher appeared on CNBC's Fast Money and recommended that investors consider the stock. He stated that the ill-will towards the company was overblown, with Groupon now serving as the popular stock punching bag. Altucher asked market participants to remember that, despite the skepticism, Groupon remains the fastest growing company ever.
Interestingly, Groupon's market cap is currently sitting around $6.5 billion. Given that Google (NASDAQ: GOOG) valued the company close to that (reportedly a little less than $6 billion) years ago, Groupon could be a bargain at its current levels.
Needham analyst Kerry Rice still thinks it would make sense for Google to buy the company, but it may wait for a further pullback in Groupon's stock.
While it's true that Groupon's business model has few barriers to entry, the company's numerous competitors have had little success in gaining a foothold in the industry. (As an example, I've spoken to Amazon (NASDAQ: AMZN) research analysts who had no idea that Amazon Local even existed.)
Of course, doubts about the company remain. The questions surrounding the company's accounting methods are well known. Further, the decision of Starbuck's (NASDAQ: SBUX) Schutlz to exit the board coupled with CEO Andrew Mason's beer drinking incident may make investors wary about the company's management.
Additionally, Business Insider has reported that some of the company's top sales talent is leaving. And of course, famed short-seller Jim Chanos has said that some of his most profitable shorts have been on companies that “looked cheap.”
Shares of Groupon are currently trading down just a bit more than 2% on the session.
Latest Ratings for GRPN
|Nov 2015||Brean Capital||Maintains||Buy|
|Nov 2015||Piper Jaffray||Downgrades||Overweight||Neutral|
|Nov 2015||Bank of America||Downgrades||Neutral||Underperform|
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