Is Groupon’s Stock Suffering From Growing Pains or Is It A Sell?

With shares of Groupon (NASDAQ:GRPN) trading at around $4.54 is GRPN a Buy, a Wait and See, or a Stay Away? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Groupon’s third quarter came in below expectations and guidance was lowered. These are potential red flags. However, Groupon is one of the most unique stories out there right now. There are strong sell signals as well as strong buy signals. Knowing which signals to listen to is a daunting task.

There are many people who have hated Groupon from the very beginning. The stock is down roughly 85% since its IPO. If you enjoy downhill skiing, then the max chart might remind you of one of your favorite hobbies. The selling might not stop soon, either. The Short % of the Float is an enormous 20.90%. Another big negative is that investors despise CEO Andrew Mason. Some people even feel that there have been questionable account practices taking place at Groupon. It’s important to note that nothing of the sort has been confirmed. That said, even if everything is legit, perception can easily become reality when it comes to stocks. Once investor panic sets in, it’s difficult for that momentum to be stopped. One way to do it is for a CEO change. Would this be fair? That’s debatable, but investors care about profit, not fairness.

There are also several reasons to be bullish on Groupon. One, their subscribers have gone from 400 to 150 million. Two, they have 250,000 merchants. Three, they recently introduced credit card payments, which will increase revenue. Four, earnings are expected to grow over the next five years. Five, JAT Capital, Bill Miller, and George Soros have initiated large positions in Groupon’s stock.

E = Debt to Equity Ratio is Strong

Groupon has a debt-to-equity ratio of 0.00. Perhaps even more impressive is that Groupon has…

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