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- 12 Jul 2014
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Groupon ( Nasdaq: GRPN )
Positives:
» Groupon STILL generates over $3B in annual revenue.
» Over the past 12 months, over 50M people used Groupon and the company
has added 1.2M active North American customers in the past 18
months.
» Groupon’s mobile app has been downloaded 133 million times, making it
one of the 25 most-downloaded apps of all time.
» Groupon has no debt and roughly $700 million in cash on its balance
sheet.
» GRPN is trading at less than 20 times forward earnings.
» Major funds including Allianz Asset Management, Renaissance Technologies
and First Trust are actively buying shares at today’s prices.
Risk Factors:
» Competition as Facebook and other social media networks have much
more money to spend on marketing and could take market share.
» GRPN is spending tons of money on marketing right now, and it is yet to
be seen if this can drive sustainable growth.
» Wall Street analysts continue to be less than optimistic about Groupon.
» Shares are down roughly -85% from their first post-IPO price of $26.11
Investment Synopsis:
» Buy-up-to price: $6
» Fair value: Short-term $8, long-term
over $15 a share if GRPN’s big marketing spend results in sustainable
long-term traffic.
» Position size: 3% of the portfolio
» Exit strategy: Sell half of the position once it is up 100%, then let the rest of the position ride long term.
Positives:
» Groupon STILL generates over $3B in annual revenue.
» Over the past 12 months, over 50M people used Groupon and the company
has added 1.2M active North American customers in the past 18
months.
» Groupon’s mobile app has been downloaded 133 million times, making it
one of the 25 most-downloaded apps of all time.
» Groupon has no debt and roughly $700 million in cash on its balance
sheet.
» GRPN is trading at less than 20 times forward earnings.
» Major funds including Allianz Asset Management, Renaissance Technologies
and First Trust are actively buying shares at today’s prices.
Risk Factors:
» Competition as Facebook and other social media networks have much
more money to spend on marketing and could take market share.
» GRPN is spending tons of money on marketing right now, and it is yet to
be seen if this can drive sustainable growth.
» Wall Street analysts continue to be less than optimistic about Groupon.
» Shares are down roughly -85% from their first post-IPO price of $26.11
Investment Synopsis:
» Buy-up-to price: $6
» Fair value: Short-term $8, long-term
over $15 a share if GRPN’s big marketing spend results in sustainable
long-term traffic.
» Position size: 3% of the portfolio
» Exit strategy: Sell half of the position once it is up 100%, then let the rest of the position ride long term.