Groupon’s Stock Price Yo-yo

Groupon's Stock Price As of Dec 9 2001
Groupon’s Stock Price As of Dec 9 2001 – Source Bloomberg

One -hopefully last- post about Groupon‘s stock price (GRPN), for the sake of completion. Groupon’s stock price has been going up and down (max $31, min $15) like a yo-yo since the stock’s November 2011 IPO. It is now back up to above its $20 issuing price.

Most analysts are skeptical or downright negative about Groupon’s financial fundamentals. I am. GRPN has assets such as its popular brand name and its significant lead over LivingSocial, its Nr 2. But Groupon hasn’t yet built the sustainable money-making machine that would justify its current price/sales ratio — more details in previous posts below.

But who cares about fundamentals? GRPN’s stock price is not determined by the company’s financial fundamentals but rather by investors’ anticipation of their fellow investors’ behaviour and by issuing conditions — such as a very low float of less than 5% of the stock which also largely explains the large current variations.

In some sense, GRPN is not much different from Western governments: raising and spending money like there is no tomorrow.  Let’s hope that at some point they can turn (around) into some serious, financially sound business!

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