Groupon (NASDAQ:GRPN) definitely has a theme for shareholders: operating the company’s finances in a very shady manner. Last Friday Groupon launched its initial offering to the public after many months of suspect activity flagged by the SEC and institutional investors. Keeping with the company theme, Groupon limited the float in their initial public offering to 5.5% of the company’s outstanding shares in an effort to manipulate price action for the company’s stock in the short term. When I add up everything Groupon has done over the past few months, this is an incredible amount of borderline activity for a public investment.
In addition to Groupon’s (NASDAQ:GRPN) abnormal behaviors, Groupon’s current valuation is a super high risk proposition: “Groupon’s $20-a-share pricing puts the stock at just under 10 times reported sales for the last four quarters. By comparison, Google (NASDAQ:GOOG) trades at about 5.3 times trailing sales, while e-commerce giant Amazon.com (NASDAQ:AMZN) trades at a relatively paltry 2.3 times reported sales.”
IF the company had a huge barrier to entry, then the stock could probably gather enough momentum to support those valuations at this early stage. However, daily deal sites have been popping up like a virus outbreak. To make matters worse, Groupon has an increasingly deteriorating reputation with local merchants and that gives other companies such as Living Social (NASDAQ:AMZN) and Google (NASDAQ:GOOG) Offers an opportunity to find a better business model for local marketing.
Whether you love or hate Groupon, options will be available on November 14th. On that day we will see how many big bets are going against what appears to be a very sketchy company. Here’s how the stock is trading now:
- Groupon, Inc. (NASDAQ:GRPN): The shares recently traded at $24.93, down $1.18, or 4.52%. Its market capitalization is $. They have traded in a 52-week range of $N/A to $. Volume today was 5,279,022 shares versus a 3-month average volume of N/A shares. The company’s trailing earnings are $-2.17 per share. About the company: Groupon advertises a daily deal, typically a half-off coupon for anything from a local restaurant or retail store to a hotel or spa; if enough consumers buy the coupon online by midnight, the deal is on and the featured business can achieve a nice chunk in sales. Get the most recent company news and stock data here >>