1-Star Stocks Poised to Plunge: Groupon?
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, "daily deal" specialist Groupon (NAS: GRPN) has received the dreaded one-star ranking.
With that in mind, let's take a closer look at Groupon's business and see what CAPS investors are saying about the stock right now.
|Headquarters (founded)||Chicago (2008)|
|Market Cap||$6.8 billion|
|Trailing-12-Month Revenue||$1.9 billion|
|Management||Co-founder/Chairman Eric Lefkofsky|
Co-founder/CEO Andrew Mason
|Trailing-12-Month Return on Equity||(51.8%)|
|Cash/Debt||$1.2 billion / $0|
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 90% of the 784 members who have rated Groupon believe the stock will underperform the S&P 500 going forward.
The main thing [Groupon] has going for it is that it was first in its field. But it's in a "no moat" business that virtually anyone can copy, and larger more prosperous competitors are already hot on its heels (Amazon comes to mind). Since this race is a marathon, not a dash, I think [Groupon] will soon be passed by a pack of competitors. The intense competition will drive the profit out of the business model. With low/no profits a one-trick pony won't survive, and no one will want to acquire a business that can be started and run with a server and a couple of desktops.
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The article 1-Star Stocks Poised to Plunge: Groupon? originally appeared on Fool.com.Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Facebook, Google, and Amazon. Motley Fool newsletter services have recommended buying shares of Google and Amazon. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.
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