Groupon (GRPN) used to be the laughing stock of social media firms. Lousy earnings reports. Accounting issues. A CEO who just seemed a little too green to be dealing with Wall Street.
Those days appear to be over. Shares of the daily deal site surged more than 13% Friday after Deutsche Bank upgraded the stock to a "buy." Groupon is now up 60% year-to-date and is 200% above its 52-week low. The stock has been on a tear since the company ousted CEO Andrew Mason at the end of February.
Deutsche Bank cited growth in mobile as one of the key reasons for its upgrade. And many traders on StockTwits are equally bullish.
It looks like a lot of the haters left along with Mason. I do think that a huge reason for Wall Street's new-found confidence in the company is due to the fact that Mason was replaced by Groupon co-founder Eric Lefkofsky and veteran Internet executive Ted Leonsis of AOL (AOL) fame. Lefkofsky and Leonsis are acting as co-CEOs.
Good point. Even after today's rally, Groupon is still more than 30% below its 52-week high. What's more, it's 60% below its IPO price of $20 from late 2011. And the company's market value, now around $5.2 billion, remains lower than the rumored $6 billion that Google (GOOG) offered Mason for the company back in December 2010.
But some traders weren't sure that Groupon can keep climbing.
Groupon has been a heavily shorted stock in the past. The recent rally may bring back more shorts to the table. And it's true that analyst upgrades are not always synonymous with real improvement in fundamentals.
Analysts are expecting sales growth of only about 10% this year and next. That's better than no growth of course. But Groupon now trades at more than 25 times 2014 earnings estimates. To justify that price, Groupon's top and bottom line growth is going to need to be better than low double-digits.
Finally, one trader made light of the fact that for a company that makes its living by offering consumers deals, its shares may no longer be a bargain.
Time for the Reader Comment of the Week. I wrote a column this week about how shares of several companies with new-ish CEOs have been outperforming the market. Groupon, in fact, was mentioned in that piece. But I also noted that investors only like to see bad CEOs leave, not the good ones. Case in point: Christine Day at yoga apparel retailer lululemon (LULU).
Despite the short-term issue with the recall of those translucent black pants, lululemon's stock was trading at an all-time high ahead of the company's earnings report. But then Day dropped a downward dog bombshell on investors by saying she was leaving the company. The stock plunged 18% Tuesday and another 5% Wednesday ... even though the earnings were good. One jokester on Twitter had this to say about LULU.
Two puns are better than one! Namaste.
Groupon will report its fourth-quarter earnings in two weeks. Is the worst over for the troubled daily deals stock?
One analyst seems to think so. Arvind Bhatia of Sterne Agee upgraded Groupon (GRPN) from "neutral" to "buy" on Wednesday morning. Shares popped 5% on the news.
Groupon has enjoyed a stellar MOREPaul R. La Monica - Feb 13, 2013 12:15 PM ET
Facebook's (FB) stock is finally starting to live up to the lofty expectations that many investors had for it back in May when the company went public.
Shares of Facebook rose more than 8% Monday after analysts at Bernstein and BTIG upgraded the stock. Facebook has now rallied nearly 50% since touching a MOREPaul R. La Monica - Nov 26, 2012 12:44 PM ET
Shares of Facebook and Groupon fell to new record lows Tuesday as investors continue punish the one-time technology darlings.
Facebook was down 1.7% in mid-afternoon trading and at one point hit $17.55, marking a new low since the stock's ill-fated debut in May.
Groupon fell 2.3% to $4.05 per share, extending this year's slide to nearly 80%.
It's been tough sledding for Facebook since it first offered shares to the public for $38 MOREBen Rooney - Sep 4, 2012 1:26 PM ET
At this rate, Groupon (GRPN) may never get back to a $6 billion market value. That number, in case you forgot, is what Google (GOOG) reportedly offered to buy Groupon for back in 2010. Groupon went public instead.
Shares of Groupon plunged 23% Tuesday to a new all-time low after the company reported revenues that missed forecasts and sluggish guidance after the bell Monday. Groupon's market value is now below $4 MOREPaul R. La Monica - Aug 14, 2012 10:22 AM ET
Investing in IPOs is risky enough when a company dots all of its i's and crosses its t's.
But ever since the Jumpstart Our Business Startups, or JOBS Act, was signed into law in April, companies with less than $1 billion of annual revenue can file for confidential IPOs.
The law was supposed to make it MOREMaureen Farrell - Aug 9, 2012 12:05 PM ET
Did Morgan Stanley get it right this time?
Morgan Stanley (MS) certainly made investors happy Friday, a day after it priced cloud computing company ServiceNow's initial public offering at $18 a share.
It looked like a bold move last night (the estimated range was $15 to $17), but early Friday ServiceNow (NOW) debuted at $23.75, more than 30% above its IPO price. And its shares are still trading around $23.
None of us MOREMaureen Farrell - Jun 29, 2012 12:22 PM ET
I doubt that there were any champagne corks popping in Facebook's (FB) Menlo Park headquarters Monday. But for what it's worth, Facebook hit a milestone in its brief history as a public company: Shares rose 4.7%, marking the first time that the stock was up for three straight days.
The winning streak hit four Tuesday. Facebook MOREPaul R. La Monica - Jun 19, 2012 4:20 PM ET
Facebook (FB) was expected to be the poster child of success when it went public two weeks ago but since its May 18 debut, shares have slid 33% from the initial public offering price of $38.
In fact, the stock closed higher only three times since then, including its first day, when it closed at $38.23 a share. That's not much of a MORECatherine Tymkiw - Jun 6, 2012 11:52 AM ET
Maybe Groupon (GRPN) should have sold to Google (GOOG) for $6 billion back in 2010 after all? Shares plunged again Monday following a nearly 10% drop Friday once the lock-up period for insiders expired. And in another corner of Troubled Techland, Research in Motion (RIMM) shares dropped below $10.
JFinDallas : It blew my mind couple weeks ago when people were bidding up$GRPN fake earnings, now reality setting back MOREPaul R. La Monica - Jun 4, 2012 1:24 PM ET
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