Tiger Global Purchases 9.9% of Groupon


According to a 13G filed with the SEC, Tiger Global Management LLC has purchased 9.9% of Groupon outstanding shares. Through various firms owned by the hedge fund, 65,000,000 shares of the Daily Deals company has been acquired. Tiger Global Management’s hedge fund, was founded by Chase Coleman, and is managed by both Chase Coleman and Feroz Dewan. The stake is worth approximately $200 million.

Groupon’s stock is down approximately 88% since the company’s IPO in November 2011. The purchase by Tiger Global could give investors confidence, as questions linger over the fate of the Chicago based company. Shares of the company are up over 5% in after hours trading. Tiger Global bought a smaller stake of Groupon Inc (NASDAQ:GRPN)  during the third quarter, according to a 13F recently filed by the hedge fund.

According to Thompson Reuters data, Tiger Global should now be the third largest shareholder of Groupon Inc (NASDAQ:GRPN) shares. However, Tiger Global is not known for its activism, and a 13G was filed, as opposed to a 13F; this indicates that at this point Tiger Global does not plan to launch a battle with management.

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Deutsche Bank analysts put out a report today, which indicates that the company has potential, but the firm is not ready to upgrade Groupon.

They note that the challenging part is assessing how many more quarters of negative trends are ahead, before evidence of a stabilization becomes more apparent to the street, they currently think Groupon Inc (NASDAQ:GRPN) is within 2-3 quarters. Additionally, given the negative sentiment that comes with their preferred low-multiple territory, they are incrementally warming up to Groupon Inc (NASDAQ:GRPN).

Furthermore,  they note that although Europe is going to remain challenged, but North America is stable (decelerating, but not declining). Goods is lower multiple than Local, but with shares at 5.6x 2013 consensus EBITDA overall, they see value in the shares.

Groupon stated on its 3Q call that the North America Local business is actually seeing sequential unit growth which implies that trends are healthier than most folks perceive, but the reported Q/Q billings decline of 15% implies further mix shift toward lower ASP deals (driven by a high volume national movie ticket deal).

Disclosure: No position

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