Groupon Inc shares witnessed a substantial drop in short interest in November. As of Nov. 28, short interest totaled about 89.3 million shares, which is a drop of 4.6% from the Nov. 14 total of about 93.6 million shares. Around 19.8% of the company’s shares are sold short.
Insider selling, analysts ratings
CEO Eric P. Lefkofsky offloaded 454,166 shares of the company’s stock in a transaction on Dec. 15. The stock was sold at an average price of $7.18 for a total transaction price of about $3.3 million, according to a filing with the Securities and Exchange Commission.
Several analysts have assigned ratings to the stock recently. Bank of America analysts upgraded the stock from Neutral to Buy in a research note issued on Dec. 1. They have assigned it a price target of $9.50, an increase from $8 a share. Barrington analysts maintained their Outperform rating on the stock in a research note issued on Nov. 17 and assigned it a price target of $8 per share, a drop from $9 per share. Goldman Sachs analysts assigned a Neutral rating to Groupon and a price target of $8 per share in a research note to investors on Nov. 12. Presently Groupon has an average rating of Hold and a consensus price target of $8.60 a share.
Is Groupon undervalued?
According to Leon Cooperman of Omega Enterprise, shares of Groupon are undervalued and are worth 40%-50% more than the price at which they are trading currently. Cooperman believes the company is turning around successfully. His Omega hedge fund purchased 8.8 million shares of Groupon, as per a regulatory filing in November.
However, a report from Bindness Etc differs from Cooperman’s view, stating that the stock’s tumble of more than 24% this year is the effect of poor fundamentals, and the stock is not under-priced. The report argues that the stock’s valuation does not support the under-priced theory, as investors have “placed $48.35 on every dollar of the company’s earnings for the next year and $1.45 on every dollar of next year’s sales.”
Market watchers are betting big on the potential growth of Groupon rather than analyzing the company’s current stock performance. Groupon is already performing better than LivingSocial, a competitor that cut a number of jobs recently.