Groupon Bottomed at 2.15x Book Value in November, Now at 4.55x Book $GRPN

When $GRPN crashed to $2.63 in November after missing Q3 revenue estimates, a price/book multiple of 2.15 finally provided a base for the stock. Today, at $5.57 per share and 4.55x book, $GRPN is up 114% from its $2.60 capitulation low in November and is trading near its 200 day moving average of $6.45. The recent move could be pricing in less-bad Q4 gross billings, revenue and earnings, which will be announced on Februrary 27. Or investors thought Groupon's stock price was undervalued relative to its book value and future growth potential. Groupon mostly has current liabilities (accounts payable, short/current long-term debt) that affect shareholder's equity. It had $1.2 billion in cash at the end of Q3 2012.

Today, Arvind Bhatia of Sterne Agee & Leach, Inc. upgraded Groupon to "buy" from "neutral" with a $9 price target because he sees significant revenue potential from its new "local e-commerce marketplace" (Bloomberg, MarketWatch, Chicago Business Journal, Fox Business).

Bhatia said (via MarketWatch),

“We recognize that meaningful risks remain, the stock will be volatile and we may be a bit early,” he wrote, adding “However, we believe the risks are well known and largely priced in.”

So Groupon could be a longer-term growth play again. I remember when people thought Google would try to buy Groupon again when it was trading at 30-50 cents on the dollar relative to Google's $6 billion bid in 2010. Groupon is currently valued at $3.62 billion (via ycharts). Thoughts on that?


GRPN Price / Book Value Chart

GRPN Market Cap Chart

Previous posts for reference:
$GRPN Shoots Up 23% on Huge Volume, Lots of Speculation (Chart) (12/8/2012)
Groupon is Almost Trading at Cash and Book Value ($GRPN) (11/11/2012)

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