Groupon’s stock hit a post-IPO low yesterday, falling to the mid-$9s.
That’s down more than 50% from the IPO price of fewer than 6 months ago.
That also translates to a market cap of just over $6 billion.
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.
For what it’s worth, I think the stock’s actually looking pretty attractive here.
I said I wouldn’t touch the stock with a 50-foot pole at the IPO price, which was ridiculous. I also said I wouldn’t buy it when it quickly fell to $16. 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 big, profitable business. And the stock’s getting close to a level where the potential upside offsets the additional downside risk.
At $6 billion, Groupon’s trading at about 2.5X this year’s revenue. 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 2.5X revenue for a virtual commerce business that dominates its market and is generating plenty of cash sounds pretty reasonable.
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