Image by: Groupon
By Steven Morrison II
We absolutely love a good Internet success story, and Groupon fit the bill so perfectly, didn’t it? The well-funded upstart offers an exciting new way to save money at local retailers, and, at the same time, give retailers a new way to boost their market exposure and get new customers in the door. Investors were clamoring to get in the boat. It was seen as a true win-win-win.
The good press was everywhere, smiles were had by all. Coupons were suddenly cool, which fit the recessed economy like a glove (a glove which was purchased, of course, at a discount). Then came the inevitable IPO and everybody made a ton of money. Which lasted seemingly for only a day or so …
But then it was as if Lemony Snicket took over the company – Groupon was suddenly besieged by a series of unfortunate events, including a public airing of their hide-the-debt accounting practices and an avalanche of bad reviews from retailers. Consequently, the company’s value tanked and its reputation soured.
And as we watched the stock fall from grace and grandeur and eventually bottom out at about 80% of its peak value, I started to wonder if their stock wasn’t the best deal Groupon was offering? Forget saving $2 on a cup of frozen yogurt – shares of Groupon are the real deal being offered by the company. Investors paid $20 or more for that little slip of paper just mere months ago.
But now it sits at $4.58. And it is expected to go higher soon. On Friday, the stock jumped 23% based on a comment in the media by Tom Forte of Telsey Advisory Group. If a single comment can cause that much of an spike, think of what kind of a boost the price could see if and when an actual deal is rumored to take place.
And that could be any day now. Speculation is running rampant that a major player may step in a gobble up Groupon or at least became a large-scale strategic partner. Remember, Google offered to buy Groupon for $6 billion and it is now worth $2.9 billion. The mighty Google sees potential, surely others do as well.
There is plenty of room to grow … so buy, buy, buy.
Is the first culturally significant large-scale promotional discounter shockingly undervalued? In a word, yes.