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 run in recent months. The stock has more than doubled from the 52-week low it hit in November. But you have to put that rise in context. At about $5.50 a share, Groupon is still more than 80% below the all-time high of about $31 that shares hit shortly after Groupon's November 2011 initial public offering.
Several traders on StockTwits were not rushing to buy the Groupon hype.
Ouch. To be fair, Bhatia admits that the upgrade is controversial and a bit contrarian. He wrote in his note Wednesday that the upgrade was "not a call on the company's upcoming 4Q results." Bhatia bolded that phrase, not I. He added that "we recognize that meaningful risks remain, the stock will be volatile and we may be a bit early. However, we believe the risks are well known and largely priced in."
And to be honest, the only social media stock that really has proven to Wall Street that it has a viable business model with diversified revenue streams is LinkedIn (LNKD). I realize there's little (if anything) in common between Groupon and LinkedIn. But investors do seem to lump these two along with Facebook (FB), Zynga (ZNGA) and Yelp (YELP) in a broader social category.
One trader suggested that Groupon could have a fighting chance if recent mergers pan out.
It's possible. But it can be a rocky road for a recently public company to be making deals of its own. Just ask Zynga. OMGPop turned itno OMGFlop after people stopped drawing much of anything.
Another trader thought that Groupon had been punished so much that it may now be a bargain stock, particularly when compared to competitors.
Not so fast. Travelzoo (TZOO), which offers deals on airline and hotels, is trading at 18 times 2013 earnings estimates. Groupon, despite its lower share price, is trading at 23 times earnings forecasts. It's the more expensive stock of the two. That doesn't mean it is doomed to lag behind Travelzoo, but Groupon is not cheap.
And speaking of travel, one trader noted that Groupon's recommendation technology for trips seems far from perfect.
Too funny. It's kind of like the Pandora (P) Jack Johnson effect. No matter what station I seem to listen to, he always comes up. Led Zeppelin? Jack Johnson. John Coltrane? Jack Johnson. Toddler Radio for Baby Buzz? Jack Johnson playing songs from the Curious George movie soundtrack. I don't like Jack Johnson! And that's why I now use Spotify and Songza more than Pandora.
If Groupon is similarly unable to give its users what they really want, that doesn't bode well for future revenue and profits.
Facebook CEO Mark Zuckerberg announced a new search tool at a highly-anticipated press event Tuesday.
The new feature, dubbed "Graph Search," allows Facebook users to search their own network of connections for people, places, photos and interests that have been shared on Facebook. For example, users will be able to search for "friends who live in my city," "photos of the Eiffel Tower," or "music my friends like."
Facebook first announced the event last week, MOREHibah Yousuf - Jan 15, 2013 4:10 PM ET
LinkedIn (LNKD) continues to be the preeminent social media stock. The company reported earnings after the closing bell Thursday that topped forecasts, sending shares up more than 1.5% Friday.
The stock pulled back as Friday wore on -- shares were up as much as 8% shortly after the market opened -- but they remained in the black even as other social media companies tumbled along with the broader market. Reviews site MOREPaul R. La Monica - Nov 2, 2012 12:38 PM ET
Facebook's stock surged more than 19% Wednesday, marking its best one-day gain since the company went public by far, as investors welcomed a healthy boost in sales.
The social media giant delivered third-quarter sales of almost $1.3 billion when it reported earnings after the closing bell Tuesday. That's up 24% from a year earlier.
In particular, investors were impressed by Facebook's ability to earn about $150 million from mobile, accounting for 14% MOREHibah Yousuf - Oct 24, 2012 4:01 PM ET
Shares of Facebook (FB) were having a nice day for a change on Wednesday. But another social network stock more accustomed to being a darling of Wall Street was also gaining ground. LinkedIn (LNKD) was up more than 6% after an analyst at Jefferies resumed coverage on the stock with a "buy" rating. Shares are now only about 7% below the all-time trading high that LinkedIn hit when it debuted MOREPaul R. La Monica - Sep 5, 2012 2:41 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
Things were finally looking up for Facebook (FB) on Friday. Shares rose in early trading Friday. If those gains hold, Facebook will snap a six-day losing streak on Wall Street. Have shares finally bottomed? Tough to say. The stock still seems overvalued at about 40 times 2012 earnings forecasts.
Investors are still worried about slowing growth. Big institutions have started to dump the shares. Facebook temporarily dipped below $20 (teenage wasteland!) MOREPaul R. La Monica - Aug 3, 2012 9:58 AM ET
LinkedIn (LNKD) has more than doubled from its initial public offering price. It's even up more than 10% from its first day closing price. Facebook (FB)? Not so much.
When LinkedIn, aka the social networking site that actually has a diverse revenue stream, reports its latest earnings on Thursday, investors are clearly hoping that the company's hot streak will continue. Check out how well LinkedIn has fared compared to its rivals MOREPaul R. La Monica - Jul 30, 2012 12:42 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 shares rose another 1.6%. So investors who bought Facebook on the day of its bungled 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 showing for a tech IPO, especially one that MORECatherine Tymkiw - Jun 6, 2012 11:52 AM ET
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