|
 |
|
|
Groupon, which recently listed its IPO, is proving to be disappointing. |
|
|
Released on Monday, February 13th, 2012, 2:57 PM ET
Pittsburgh, PA (SpeculatingStocks) - Groupon Inc. (NASDAQ:GRPN) - Took a dive today in mid-day trading, dropping off as much as $1.17 per share so far, or -9.05%. Its current price is listed at $19.13 per share (2:25 PM EDT, February 13th, 2012). This recent drop-off isn't a short sighted view, apparently.
Recently there have been substantial questions as to what exactly does the Groupon business model detail? Quite frankly, it doesn't produce much of anything, and that's truly what we are concerned with. With negative values all across the board: from Return on Equity to an EPS of -$0.39 per share, the company is looking at a hard position to dig itself out of.
With a present market capitalization of roughly $12.20 billion, Groupon has lost a portion of its market cap., with fears that the stock price might even retrace all the way down to the 52-week low of $14.85 per share. While the company has reported increasing net revenues over the past several quarters, it leads to question, where exactly is all the money going if the net income has actually decreased since the last quarterly earnings report?
Even worse, the cash flow statement reveals a massive amount of financing, which largely has overshadowed the total operating decrease in cash flows. In order to sustain this program, Groupon will either have to continue to sell shares of stock through placements, or increase borrowing from lending institutions. Or the last option—and probably the least likely—actually produce positive net cash flows from their operating activities.
As recent trends have shown, the outlook for this stock isn't pretty, it seems. Trade what you will, but we would play as many market traders have so far and join the some 16 million shares short (as of Jan 31st, 2012). With a short-interest ratio at around 10.7 (as of Jan 31st, 2012), this means that you would have to wait roughly 10-11 days in order to regain your position if you shorted, and is generally accepted to be fairly low. Watch this number, if it begins to trend higher, you might want to consider exiting your position.
Find more stocks on the SpeculatingStocks homepage.
Comments:
|
|
