Why Groupon's Shares Surged

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of online-deal maven Groupon (NAS: GRPN) were charging up today, rising as much as 13% in intraday trading.

So what: Groupon's big run came on the heels of an upgrade from Morgan Stanley analyst Scott Devitt, who upgraded the stock from "equal weight" to "overweight" on the view that the company has gotten better at targeting deals for customers while significantly cutting expenses. He also said deep-pocketed competitors such as Amazon.com (NAS: AMZN) and Google (NAS: GOOG) have lost a step on Groupon.


Now what: This is a nice vote of confidence for Groupon investors, after the company has been on the receiving end of significant bad press since its IPO. However, it's important to bear in mind that this is just the view of a single analyst -- and an analyst from Groupon's lead IPO underwriter, no less. So today's upgrade could be a good reason for investors to revisit their assumptions on Groupon, but it needs to be taken with a grain of salt and isn't alone enough to pull the trigger.

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At the time this article was published The Motley Fool owns shares of Amazon.com and Google. Motley Fool newsletter services have recommended buying shares of Amazon.com and Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributorMatt Koppenhefferowns shares of Morgan Stanley but has nofinancial interest in any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting hisCAPS portfolio, or you can follow Matt on Twitter,@KoppTheFool, or onFacebook. The Fool'sdisclosure policyprefers dividends over a sharp stick in the eye.

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