Friday, March 16, 2012

Groupon follow up

More trumpet blowing. In early Jan I mentioned how Groupon represented really poor value as a stock. I don't mind it at all as a consumer. Indeed I just purchased another full car service from a local garage for a mere £40 through the site. However, the business model is flawed relative to the valuation. The chart below shows what has happened to the stock over the past three months. The actual stock price (blue line) is pretty much bang on where it was when we started the year. However, the orange line drifting steadily higher is the broader Nasdaq market.

Did I have an outright position or a spread trade perhaps? Nope. It's all talk and hot air. If I take any positions, no doubt Groupon will find a route to strong profitability or be taken over in a bidding frenzy, such are the universal laws. I remain on the look out for other questionable companies starting with the letter G.

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