This online marketplace stock is being bandied about as a possible takeover candidate. The company beat estimates by four cents last quarter, and Alibaba just bought a significant amount of its shares.
Groupon Inc. (GRPN)
From The Buyback Letter
Groupon Inc. (GRPN), the online marketplace, is pretty much the place you start when you want to buy something. The company offers consumers discounts on restaurants, vacations, electronics, fashion, beauty, home furnishings and other goods, both locally and around the world. From the perspective of a business, it helps them attract, retain and interact with customers, and provides them with a suite of products and services, including customizable deal campaigns, credit card payment processing capabilities, and point-of-sale solutions to help them grow and operate more effectively. It was founded in 2008 and is headquartered in Chicago.
Alibaba, China’s biggest online commerce company, just bought 33 million shares (a 5.6% stake), making it the fourth-largest investor in Groupon. Alibaba might leverage Groupon to understand the business dynamics and strategies followed in the U.S. market, in which it would like to expand.
In late February, Groupon announced it had completed its billionth sale (an $11 deal for $20 worth of pizza in St. Louis), joining other companies like Apple and McDonald’s in the billion-sold club.
Under new chief executive Rich Williams (who joined Groupon in 2011 from Amazon), Groupon plans a big $200 million marketing push in 2016, so you’ll hear about the company in search-engine marketing, Facebook and TV ads, as well as drive-time radio and hotel elevators. He’s working on restructuring, pulling out of some non-profitable markets, and plans a turnaround in the company’s performance with a three-pronged strategy emphasizing international growth, shopping and marketing initiatives.
Q4 sales and earnings beat analyst estimates. The company was hit with a recent patent-infringement lawsuit by IBM; those lawsuits are common in the tech industry.
Management has reduced shares outstanding by 13.14% in the last 12 months.
David R. Fried, The Buyback Letter, www.buybackletter.com, 888-289- 2225, March 19, 2016