Back in November 2011, Groupon Inc (GRPN) pulled off a red-hot initial public offering of a cool $700 million. The stock, which was priced at $20, skyrocketed to $27 for a hefty $13 billion valuation.
Of course, the IPO would represent the high-water mark for GRPN stock, as the daily-deals market would quickly fizzle.
However, lately there have been signs of life. Consider that GRPN stock has logged a return of 42% for the year so far. By comparison, Twitter Inc (TWTR) is off 27% and LinkedIn Corp (LNKD) has lost 50% of its value for 2016.
So what’s going on here? Well, there are savvy investors that see potential in GRPN. Just take a look at Atairos Management LP, which today announced a $250 million investment.
Although, the deal is more than just about money. Keep in mind that Atairos is led by the former CFO of Comcast (CMCSA), Michael Angelakis. His fund, which got started this year, has over $4 billion.
And when reading the press release, you’ll notice some interesting nuggets. After all, Comcast plans to work with GRPN to explore partnership opportunities. Given the huge scale of Comcast, this could certainly move-the-needle.
Now the interest in the company should not be a complete surprise. The fact is that Groupon has spent the past few years engaged in a major restructuring, slashing its cost structure and scaling back its global operations (since 2015, GRPN has decreased its footprint from 47 countries to 28). The company has also been getting savvier with its product line, focusing on higher-margin categories like health/personal care, home goods, apparel and jewelry.
Granted, the growth rate has remained meager, with a 3% increase in the latest quarter. But there are encouraging signs. For example, North America was up a hefty 12% and the company has an active customer base of nearly 49 million.
Something else: Atairos and Comcast are not the only ones showing interest in Groupon; there is also Alibaba Group Holding Ltd (BABA), which recently disclosed a 5.6% stake in the company.
As InvestorPlace’s Hilary Kramer noted, there may ultimately be some type of merger: “Still, it’s clear that BABA executive chairman Jack Ma covets the Western reach Groupon can give him.”
Bottom Line on Groupon Stock
Yet, betting on such an outcome can be dicey. Just look at all the rumors about struggling tech operators such as BlackBerry Ltd (BBRY).
What’s more, Groupon stock has already staged a big rally, which was partly fueled by a short squeeze (nearly 14% of the float are in short positions). And yes, it will take some time to get traction with the partnership opportunities. In the meantime, GRPN will still need to deal with intense competition from rivals eBay Inc (EBAY), Amazon.com, Inc. (AMZN) and Alphabet Inc (GOOG, GOOGL).
In other words, it’s probably best to just keep Groupon stock on the radar screen for now.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
