Shares in Groupon Inc (NASDAQ:GRPN) jumped more than 9 percent today in the wake of an upgrade of the company from Stifel analyst Jordan E. Rohan. Rohan said that the online deals company had created opportunities for growth by moving away from its traditional strategy in order to widen its appeal.
Groupon Inc (NASDAQ:GRPN) hit a high of $12.70 per share in trading today on the upgrade and easy market in technology stock in the wake of the Federal Reserve’s decision to keep QE at the same level indefinitely. Today’s high is the priciest Groupon shares have traded for since the post IPO fall through 2012.
Groupon opportunity
The Stifel report saw great opportunities for Groupon Inc (NASDAQ:GRPN) ahead as it tries to move bey0nd the business that made it successful initially. Groupon made its name by emailing its users group deals which would be offered if enough people signed up. Groupon has been criticized by investors in the past for having no moat because of the simplicity of replicating the business.
Groupon Inc (NASDAQ:GRPN) is trying something new. Groupon is now trying different businesses like product sales, restaurant bookings and payment processing. These new businesses, leveraging the Groupon brand, are defensible by the company. The Stifel analyst likes to see Groupon expanding, as its share price surely is today.
Rohan put a Price Target of Buy on shares in Groupon Inc (NASDAQ:GRPN). His belief is that the company move away from email and into applications and mobile business, which will change the way the company does business from the ground up. His price target on the company was set on $16.
Groupon Inc (NASDAQ:GRPN) shares have risen massively through the year so far in reaction to the losses the company saw on last year’s market. Groupon opened the year trading at less than $5 per share, and started this week trading at just over $11. With share headed toward $13, and the hefty words of the Stifel analyst behind them, investors are wondering when the Groupon rally might stop.
Investors will remember the reason that Groupon Inc (NASDAQ:GRPN) shares lost value last year, and they’ll remember that those problems are still not a million miles away from the business. Groupon is a risky bet to head for $16, but the company might be able to make it. A lot of investors are betting that they will today.
