Groupon Inc shares are down by over 33% year to date due to unimpressive past quarters as the company has been facing tough times recently. In February and May, the numbers were below the expectations of Wall Street. In October, the quarterly results were better than expectations but did not drive the stock, which has been reeling for the past six months.
Groupon makes location-based efforts
Instead of focusing on its performance, market watchers take keen interest in Groupon as it exhibits huge potential. Groupon is faring better than its arch rival, LivingSocial, which recently scrapped a number of jobs.
Chilton Capital's REIT Composite was up 6.1% last month, compared to the MSCI U.S. REIT Index, which gained 4.4%. Year to date, Chilton is up 6.3% net and 6.5% gross, compared to the index's 8.8% return. The firm met virtually with almost 40 real estate investment trusts last month and released the highlights of those Read More
More than half of Groupon’s revenue comes from its Goods business, and local commerce contributes around 80% of the company’s profit. There are various new pages included as a part of the new initiatives. Also Groupon is making efforts to launch location-based enhancements, which will help the company by luring in new customers. The company has a huge subscriber base of 50 million active customers and a mobile app that has been downloaded 100 million times.
Experts back the stock
Groupon shares rose following a statement from the CEO of Omega Advisors, Leon Cooperman, who said the value of the company is around 50% more than its current stock price. During his interview with CNBC, Cooperman said the value of the underlying assets is substantially more when compared to the price of the stock at which it is currently trading. Cooperman, who feels that the stock is underpriced, is hopeful of a successful turnaround. Mr. Cooperman’s hedge fund acquired 8.8 million Groupon shares in the third quarter.
Brean Capital is also bullish on the stock, saying they are impressed by the strong holiday sales, which should help the company’s profit margins.
Groupon has been subjected to a number of analyst estimates recently. Bank of America analysts upgraded the stock from Neutral to Buy in a research note on Dec. 1. Barrington research maintained an Outperform rating on the stock and cut their price target from $9 to $8 in a research note to investors on Nov. 17. Analysts at Goldman Sachs raised their price target on the stock to $8 per share in a research note to investors on Nov. 12. Presently, Groupon has a consensus rating of Hold and an average price target of $8.60.