Updating My Outlook For Groupon As Shares Surge Into Year End

| About: Groupon, Inc. (GRPN)
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Shares of Groupon Inc (NASDAQ:GRPN) have surged nearly 70% since I turned bullish on the stock just a month ago.

GRPN ChartGRPN data by YCharts

Google Takeover Speculation

GRPN shares have benefited from rumors that Google (NASDAQ:GOOG) is considering making a bid for GRPN. This news does not come as a surprise to me. In my previous article, I listed a potential takeover as a reason why I was turning bullish on GRPN. Now, however, with takeover rumors becoming more mainstream, it must be noted that the market is beginning to price in a greater likelihood of a deal. If no deal materializes soon, GRPN shares will likely experience some selling pressure. If a deal does materialize, I expect GRPN to receive a significant premium to the current price.

Tiger Global Takes 9.9% Stake

Tiger Global Management, a multi-billion dollar hedge fund, recently disclosed a 9.9% stake in GRPN. The stake has been described as passive, not activist. In addition to Tiger Global Management, investor George Soros also recently disclosed a new stake in GRPN. I view these stakes as a vote of confidence in GRPN. However, it must be noted that both Tiger and Soros likely paid significantly less for GRPN shares than the current price.

Andrew Mason To Remain CEO

Following rumors that CEO Andrew Mason may be forced out of his position, GRPN in late November confirmed that Mason will remain CEO. In my previous article, I argued that having Mason as CEO was a positive. While many unhappy GRPN investors may have liked to see Mason replaced, I believe that he is the right guy to lead the company through a transformational time.


With GRPN shares up nearly 70% in a month, I think it makes sense for investors to take at least some profits. I tend to believe in the saying "bulls make money, bears make money, and pigs get slaughtered." Perhaps investors who bought GRPN close to its all time low of $2.60 should sell enough to recover their initial investment and let the rest run. While I think more upside is more likely than not, GRPN is a riskier trade at these levels than it was at $2.60, especially considering GRPN's $1.82 in cash per share. For investors who are not yet involved in the stock, I would look to buy shares on a pullback below $4.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.