Groupon’s Final Deal: 100% Off GRPN Shares
By Hilary Kramer, GameChangers
Stocks considered dead money can rise from the ashes, or they can stay dead. It’s tempting to think that companies generating a lot of buzz will be the ones to bounce back, but that’s not always the case. One much-hyped company that I see as dead money is Groupon (NASDAQ:GRPN).
Groupon is a deal-of-the-day website that features discounted gift certificates that can be redeemed at various stores and companies. Although their $10 deals will get customers through the door, the reduced prices cut into profit margins.
Since going public in 2011, Groupon’s stock has dropped more than 80%, and the company’s chances for survival grow smaller by the day. First, barriers to entry are low. It doesn’t take much for other businesses to get in on the action, and we’ve seen the king of online stores, Amazon (NASDAQ:AMZN), do just that.
In addition, the advertising game itself is changing as companies do more of their own targeted and interactive advertising in our always-connected digital world. I just recommended a company that has a unique software that helps businesses deploy targeted email and mobile advertising, including couponing. That’s where the future lies.
Groupon’s current business model isn’t sustainable. And this isn’t even the only daily deal company that’s failing. LivingSocial, which offers similar deals, recently laid off 9% of its global workforce.
Stay away from Groupon. It’s dead money that I don’t see it coming back to life anytime soon — if ever.
At the time of publication, Kramer had no positions in the securities mentioned.