Groupon has recently been a quiet tear, doubling its share price since its record low in the middle of November last year, with its market capitalization rising towards the $3.5 billion mark.
The company has still suffered incredible declines: its 52 week low may be a mere $2.63, but its 53 week high is a stunning – in comparison – $25.84. At one moment, Groupon had all but shed 90% of its market capitalization as its growth prospects slowed and the company turned its focus to new products and profitability.
Today, Groupon’s share price is trading in the range of the $5.20, resting at $5.24 at the time of writing.
The company’s total valuation has two key benchmarks to be measured against: its initial market value at the date of its public offering, and the spurned Google offering, which totaled more than $5 billion, when an earn-out was included. In short, by both metrics, Groupon has been a dramatic loser, shedding billions in investor capital during its descent.
However, just as many retail investors lost on the way down, it appears that one private fund has made an impressive profit on the firm’s stock. In the middle of November, 6 days after its record low, hedge fund Tiger Global announced through that it had acquired a 9.9% stake in the company. At the time, Groupon was worth a mere $2 billion or so – following a dramatic rise in its stock following the announcement -, making Tiger’s stake worth roughly $200 million.
At today’s valuation of $3.4 billion, from the time its investment became known, Tiger’s stake has risen in value to $344 million, for a tidy $144 million paper profit. Certainly it must be happy with that quick gain. $144 million in roughly 52 days is never bad earnings.
For now, Groupon has decided to keep Andrew Mason, it’s founder and long-time CEO at the helm. That decision recently led to a decline in its stock, as the market punished it for not removing its chief. However, the company has promised a profit for the quarter that just completed. If investors will be impressed remains to be seen.
Revenue growth, long the company’s genie, needs to be reignited for its share price to catch real wind.
Top Image Credit: TechCrunch