Groupon’s stock just crashed through $9, hitting a post-IPO low.That’s down more than 55% from the IPO price of fewer than 6 months ago.
That also translates to a market cap of less than $6 billion.
For what it’s worth, that’s the amount that Google offered to buy Groupon for, in cash, in the fall of 2010.
Think Groupon’s bummed they sniffed at that offer?
Maybe, maybe not. That will presumably depend on the end of the Groupon story.
But you can bet they’re thinking about that question a lot now. Especially because, if they had taken the money, fixing Groupon would be someone else’s problem.
For what it’s worth, I think the stock’s actually getting pretty attractive here.
But there’s a fair price for everything. And I still think Groupon is a real company that will continue to grow and ultimately build a profitable business. And the stock’s getting close to a level where the potential upside offsets the additional downside risk.
At just under $6 billion, Groupon’s now trading at just north of 2X this year’s revenue (~$2.5 billion). This year’s revenue should grow at a healthy rate over last year’s revenue. The company is also now operationally profitable, which suggests it can have a meaningful profit margin in a few years, when it gets much more efficient.
I’ll run some more detailed numbers soon, but ~2X revenue for a virtual commerce business that dominates its market and is generating plenty of cash is getting reasonable.