Author Topic: GRPN - Groupon  (Read 15677 times)

given2invest

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Re: GRPN - Groupon
« Reply #60 on: December 09, 2018, 07:48:19 AM »
I'd start with the last shareholder letter (which is actually the first one ever written) and go from there.


heth247

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Re: GRPN - Groupon
« Reply #61 on: December 09, 2018, 11:05:32 AM »
I'd start with the last shareholder letter (which is actually the first one ever written) and go from there.

Given2invest, couple of questions for you:
1. When you say the margin of safety at $3 is very big, can you quantify it?
2. What do you think the catalyst is and how long will it take? If it is a buyout, will somebody buy a business in the middle of transformation?

thanks.

Sportgamma

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Re: GRPN - Groupon
« Reply #62 on: December 10, 2018, 12:09:46 PM »
I'd start with the last shareholder letter (which is actually the first one ever written) and go from there.

The letter was ok, I found. Focus on operational metrics but vague on the financials. Perhaps it is just that a certain Edward kind of ruined the word transformation for me.

That being said, the strategy outlined in the letter makes sense. Owning the relationship with the customer should be much more valuable than the legacy business. It all comes down to execution though and I assume that sounds very scary to many investors.

Take a look at this offer for example: https://www.groupon.com/deals/ga-fleetway-travel-rome-amalfi-7
  • If they want to own the relationship with the customer, why on earth are they placing ads to some super shady comparison site on the product page? This is beyond stupid.
  • If you scroll down to the reviews, the top review begins with (and I kid you not) "My friend and I had such a great time in Barcelona" (this is a trip to Italy...).
  • Scrolling further down, we get to the Other Recommended Products. Again, this is a 7-day package to Italy. Groupon decides to show me hotels in Las Vegas, Niagara Falls and Dallas...why?

I'm not sure if I should see this as a negative or a positive. Perhaps the fact that they are screwing up the 101 stuff of eCommerce means that they have a lot of runway left to extract gains out of the transformation?
« Last Edit: December 10, 2018, 12:16:54 PM by Sportgamma »

given2invest

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Re: GRPN - Groupon
« Reply #63 on: December 11, 2018, 09:59:10 AM »
I'd start with the last shareholder letter (which is actually the first one ever written) and go from there.

Given2invest, couple of questions for you:
1. When you say the margin of safety at $3 is very big, can you quantify it?
2. What do you think the catalyst is and how long will it take? If it is a buyout, will somebody buy a business in the middle of transformation?

thanks.

1)  It's not expensive.  You can see what the FCF guidance is for this year and the EV.  Note there will be a nice influx of working capital on year end balance sheet.  I think the safety is there because the #s have not been bleeding the last few years as the core biz/email biz has obviously fallen off a cliff.  The numbers and page views don't seem like a biz that's about to implode.  It's just stagnant with a "free option" on them transforming the biz.

2)  Catalyst is either a PE buyout (this fits perfectly with PE...can put a little leverage on it, take it out of public eye for 3-4 years, then bring public again or sell to strategic) or just sell to strategic.   I mean they were looking to sell company when it was trading at $5 last summer.  It's now $3.  There is net cash.  The other catalyst would be people see the transformation working and put a huge multiple on "newco". 

I also think this biz works better in a recession than most.  Both businesses would need them more and consumers would gravitate towards it.