Will Groupon (NASDAQ:GRPN) Survive?


Groupon (NASDAQ:GRPN) is a name, few will be unfamiliar with. It has a huge customer following and provides discounted deals and gift certificates usable at different companies. Even though Groupon (NASDAQ:GRPN) was a product of America, it wasn’t long before every country adopted it and adjusted it according to their needs. It was launched back in November 2008, and by October 2010, it had over 150 outlets in North America and an additional 100 within Europe, Asia as well as South America. Its registered user figures hiked up to a remarkable 35 million in a very short span of time.

The company initially valued at $1.35 billion in April 2010. After being featured in Forbes Magazine and Wall Street, it was celebrated for making sales at a much faster pace than any other company. However, by October 2011, things changed, and according to reports by Forrester Research, Groupon (NASDAQ:GRPN) business model turned into a disaster. Since then, the company has been fluctuating between highs and lows, but never really hitting the point of success it did at first.

The Thomas Reuters prediction for this quarter is a mere $0.01 EPS, with revenue at $748.76 million. Last year however, the EPS was of $0.02 with revenue round up of $595.06 million.

The way Groupon (NASDAQ:GRPN) works is quite ambiguous, as per the Wall Street revelations. It could be a stroke of luck for Groupon (NASDAQ:GRPN) that they could gain or attract a lot of investors at once, or they could just as easily loose many in one time.

According to recent speculations by Brett Strauser and Arvin Bhatia of Sterne Agee, Groupon (NASDAQ:GRPN) is offering more deals and discounts as compared to its competitors. With such a strategy at work, it is highly unlikely that the company will be able to grow on the current valuation it has. According to these speculations, Groupon (NASDAQ:GRPN) should shift its focus to the North American market, particularly looking into the local billing and increase of the gross margins there, especially in the Goods category. They have made their September call at Buy rating of $12 price target.

Two other similar calls were made by Credit Suisse and Deutsche Bank. Credit Suisse had a price target of $6.50 to $10.00 on the 6th of August. Whereas Deutsche Bank price target was $7.00 to $8.00, for the same day.

Its 50 day moving average read $6.52, while the 200 day moving average was up at $7.22. The company’s success is most dependent on its investors. A slight shift of $0.50 or more in any direction could impact the share by 9%, in either a fall or a rise.

On Wednesday, however, the shares of Groupon (NASDAQ:GRPN) closed at $5.79, down by 3.5%. The analyst price target is $7.30, whereas, the 52 week trading is $5.18 to $12.42, with a $4 billion market cap. Things can turn either positive or negative, with slight margin shift for the company. Such vague situation leaves a company’s fate in the hands of its investors.