Groupon stock rose 12 percent on Friday: crash temporarily alleviate fears

Published: 15:52:56 June 17,2013  Views: 268
Groupon stock rose 12 percent on Friday: crash temporarily alleviate fears U.S. stocks trading on Friday, Groupon shares rose 12%

Lead: foreign media wrote today that the United States buy giant Groupon recently due to huge marketing investment, business lacks depth, by Wall Street analysts generally look bad, seems to be the brink of collapse, but on Friday, Deutsche Bank recommends investors buy Groupon shares, the company's share price rallied 12% in one fell swoop eliminate investor concerns.

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Swept away the haze

Not long ago, Groupon was considered the verge of collapse. Critics said, Groupon huge marketing investment, while the lack of an effective means to protect their own business.

But things have changed in the Deutsche Bank released a study report, recommends investors buy the stock after Groupon, Groupon shares closed at $ 7( on Friday, compared with the previous trading day rose 12 percent in the past six months, Groupon shares steady recovery phase than last November's lowest point in history, has turned nearly tripled to Groupon collapse fears temporarily vanished.

However, if you want to return to high growth path past, Groupon still has a long way to go(Technology News Groupon's IPO (initial public offering) issue price of $ 20, its pre-revenue expected six times, and then not yet profitable, therefore, such a high issue price move is considered to be absurd, but this has always been to buy the giant vitality known.

When Groupon listing document submitted in 2011 when the company's marketing costs account for over 50% of revenues, while the first quarter of this year, this proportion dropped to 8%. Marketing investment has shrunk dramatically on Groupon's business growth with to the adverse effects, but company executives did not cause concern Bale.

In addition, Groupon does face many obstacles to development, including a huge user base and more than 4,000 people worldwide sales team. Obviously, labor in determining a company's competitiveness, the importance of the difficult than the technology, but as a Groupon at the most local advertising terrible long-term rival, Google also hope that businesses buy their own advertising. fact, most businesses need help, but as time goes on, the cooperation with them will eventually have strategic significance.

Biggest challenge

Groupon's challenge is, the ability to maintain rapid growth in the same time, to achieve long-term profitability targets due to the poor performance of foreign operations, Groupon revenue long-term stagnation. Nevertheless, Groupon business model as long as the right to make some adjustments, which enhance the customer value, then there might be revitalized, re-embark on the road of rapid growth.

Today, Groupon buy discount extended its activities in the time spent on the site, so that whenever the user wishes to buy, can Groupon landing sites, participate in their favorite products and services to buy, compared to the past long-term dependence on electronic mail bombardment, this means fewer users.

Groupon has its 'indirect' business (mainly buy) to develop a long-term operating margin target of 25-30 percent, according to U.S. investment firm Evercore Partners estimate, Groupon 'indirect' business last year's operating margin was 15% As to product sales of the 'direct' business, Groupon's operating margin target of 8%, while last year is estimated to be -18%.

Stock Price Trend

Whether it is 'direct' business, or 'indirect' business, these are ambitious goals, but assume Groupon in 2016 to achieve the above goals, while still maintaining an average annual sales growth of 12%, then the resulting free cash flow indicates, Groupon will be $ 9.70 when the stock price.

Groupon Friday's closing price which is more than 27% higher, although it seems pretty good, but it must be guaranteed in all business areas have achieved positive progress in order to direct business, for example, Evercore Partners is expected that the sales of businesses in Groupon 2013 the proportion will reach 35%. competitors like Amazon, although unlike Groupon buy products made for careful planning, but many of the products it sells the same with the Groupon, Groupon and delivery time is unmatched.

Assuming Groupon did not achieve these operating margin targets, but business is progressing fairly smoothly, in 2016, revenues to grow at a rate of 8% per annum, buy business, profit margins reached 20%, while the direct marketing business, profit margins of 4 % Accordingly, estimates, Groupon's share price will be $ 8 will only compared with last Friday's closing price is higher by a little something, ie, Groupon's discount model will still continue to exist, but the stock does not have too big improvement. (Qing Chen) Best News, Latest News and Current News from Latest Current News: U.S., China, World, Entertainment, Health, Finance, Business, echnology, Travel, Politics, Sports.