Groupon (NASDAQ:GRPN) was a stock that investors loved to hate in 2012. The company had a knack for missing earnings estimates, CEO Andrew Mason seemed to be more a comedian than a leader and, of course, the stock tanked.
But could the daily-deals site be changing its ways?
Well, at least one person thinks so. Sterne Agee analyst Arvind Bhatia just changed his rating from “neutral” to “buy,” putting a $9 price target on the company. (GRPN was trading at $5.30 to begin the day.)
Bhatia says he likes Groupon because it was moving beyond its core daily-deals business, which relies heavily on email marketing. Instead, the company has been focused more on an e-commerce marketplace that uses search engine channels and mobile queries, which tend to be much less spammy and intrusive.
The new approach sounds like a good idea, and Groupon still can leverage its massive infrastructure, which includes thousands of salespeople and more than 40 million active customers. It also helps that daily-deals rivals like LivingSocial have been fading away.
Still, investors shouldn’t be expecting an immediate turnaround. Groupon’s e-commerce marketplace initiative is still in its early stages; right now, it only has operations in Chicago and New York. Instead, Bhatia says his bullishness is for the long-term … not necessarily the next couple quarters.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.
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