Sunday, November 11, 2012

Groupon is Almost Trading at Cash and Book Value ($GRPN)

Since GRPN (Groupon) appears to be approaching the zero bound on its balance sheet, this is my last $GRPN crash post after 1, 2, 3. On Friday, $GRPN crashed 29% to a record low of $2.76 after missing Q3 revenue estimates (Chicago Suntimes, Chicago Tribune, Bloomberg). During the third quarter, gross billings fell again sequentially (quarter over quarter), revenue was unchanged sequentially, and net income was in the red after reporting a net profit in Q2. Gross billings actually rose slightly in North America during the quarter, but continued to trend down internationally (see tables). On a positive note, its marketing expense as a percentage of revenue made a new low (see Statista's infographic) and they are reducing their headcount. So they are trying to make a profit.

At $2.76, Groupon has a market value of $1.8 billion (653.224M shares outstanding*$2.76). And as of September 30, Groupon had $1.2 billion in cash, no debt, and a book value of $799 million. Ycharts.com has Groupon's book value at $804 million using their own calculations. In the chart below via Ycharts, you can see that Groupon's market value is trending towards its cash and book value as of 9/30/2012. On a per share basis, Groupon had $1.84 in cash (1.2B/653.224M, also on Yahoo Finance/Capital IQ) and a book value of $1.235 (via Ycharts) at the end of Q3. Its price/book ratio is at 2.235 via ycharts. Like I mentioned before with Zynga, even though $GRPN is a beat up stock, bulls are still battling technicals and fundamentals that are trending down. But if $GRPN falls all the way to cash and book value without revenue and earnings crashing, it could be a potential turnaround play or buyout candidate in the internet/mobile space. Google wanted it for $6 billion(1,2)! Something to watch.


GRPN Book Value  Chart



Quarterly revenue and gross billings trends via Groupon's Q3 2012 slides:




key-metrics-of-groupons-business

Find more statistics at Statista

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