New Capital
Contrarian, deep value, long/short equity, special situations

Coupons.com - Crazy Growth Assumptions Necessary To Justify Valuation - At Least 55% Downside With Clear Catalyst

Coupons.com (COUP) is a 16-year-old company that is currently trading at P/S=10 and continues to produce losses. It also trades at 50% premium compared to its IPO price of $16/share just 4 months ago. The company seems to trade at post-IPO hype levels and crazy growth assumptions are necessary to justify its valuation. I am short Coupons.com stock and long Coupon.com November puts. This article will clarify the rationale behind my trade. Key items of my short thesis are:

    Coupons.com business model does not offer anything revolutionary that could justify sky-high valuation. There is no operating leverage despite fourfold increase in revenues; Total addressable market is limited, measurable and not growing. Only shift from offline to digital coupon ...
Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
FREESA PRO MEMBERS
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details