On Thursday Seeking Alpha accepted my article for publication "Should You Avoid Coupons.com's IPO And Buy Undervalued Groupon Instead?"
Unfortunately, it was taken down for editorial review. The problem with the article is that it links to form S-1/A that was filed with the SEC on February 14, 2014. On February 25, 2014 the company amended that form and reported a 2.5 for 1 reverse split, reducing the outstanding shares. In effect, my article challenged the valuation of 11 to 17 times gross revenues (sales) of $167,892,000, which was based on the IPO price of $12 to $14 and the pre split shares.
Coupons.com's 11th hour reverse split, reported on February 25, 2014 to the SEC on form S-1/A changed the valuation making my previous research appear incorrect. But as you can see today, March 7, 2014, shares of the company priced at $16, were bid up to $27, and now are trading at $32.40 per share. By my calculations today, shares are now valued around 13 to 14 times gross revenues (excluding the other shares to hit the market later) making the company clearly overvalued.
Shares are extremely overvalued at $32.40 just as I stated in the article. The reverse split 2.5 for 1 share basically holds the same pre split overvalued price of about 13 to 14 times gross revenues. Coupons.com has a 2.3 billion to 2.4 billion market cap or 13 to 14 times gross revenues -- overvalued.
The 11th hour reverse split, 2.5 for 1, has caused the stock price to go from the first estimates of $10 to $12, then $12 to $14, then $16 and now $32.40 succeeding in creating an overvalued stock at 14 times gross revenues and validating my original valuation.
By comparison, Groupon is undervalued at 2.3 times gross revenues, making Groupon the wise choice.
I tried to inform everyone as to what was going down, but...
I leave you with this question. Why did the company pull a 11th hour reverse split?
Disclosure: I am long GRPN.