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.
Netflix CEO Reed Hastings caused a stir last year after he revealed that Netflix's monthly online viewing had exceeded one billion hours on his Facebook page instead of a press release or public filing. That raised concerns about whether social media posts were in compliance with the Securities and Exchange Commission's Regulation Fair Disclosure (Regulation FD) rules.
But following an investigation prompted by Hastings' post, the SEC has decided it's MOREHibah Yousuf - Apr 2, 2013 4:24 PM ET
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 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 low of $17.55 in early September. The stock, currently around $26, is trading at its highest level since MOREPaul R. La Monica - Nov 26, 2012 12:44 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
Many of Facebook's rank-and-file employees got their first chance to dump their shares Wednesday as U.S. financial markets opened for the first time this week.
Shares of Facebook (FB) declined more than 4%, as a total of 234 million shares became newly eligible for sale. About 50 million Facebook shares exchanged hands in the first hour of trading.
For many of Facebook's employees, whose so-called restricted stock units (RSUs) converted to common stock last week MOREHibah Yousuf - Oct 31, 2012 11:20 AM 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
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.
Facebook (FB) is on a tear lately. Shares are up about 17% since CEO Mark Zuckerberg spoke at the TechCrunch Disrupt conference last week and merely stated the obvious: that the performance of the stock after MOREPaul R. La Monica - Sep 20, 2012 1:05 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
Sina Corp., which operates China's Twitter-like microblogging site Weibo, posted a surprise second-quarter profit of $33.2 million, more than triple the amount a year ago.
The results, which included an 11% jump in revenue, blew investors away since analysts had predicted that the company would post a slim loss for the quarter. Shares of Sina (SINA), surged 14% to their highest level since May.
Sina's CEO Charles Chao noted that Weibo, which MOREHibah Yousuf - Aug 16, 2012 3:22 PM ET
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