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Groupon Inc. Intends to 'Catapult' Itself Past Competition

December 12, 2013 | About:
Pushpa Naresh

Pushpa Naresh

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Groupon Inc. (GRPN) is a $6.77 billion market capped e-commerce platform which connects business to retail customers online. Over the trailing 12 months the company has managed to post sales of $2.44 billion and has recorded net loss of $95 million in the same period. It is the smaller of the big online retailing stores like eBay Inc. (EBAY), Best Buy Co. Inc. (BBY) and Amazon.com Inc. (AMZN) which has shaken the foundations of how the retailing segment used to operate in the U.S. markets until recently.



Making Its Moves to Counter Amazon


Since it is the smaller player in the e-commerce market place the company has been striving to get disruptive in its approach to the market and thereby alter the dynamics of its market place. An example of how its response to its well-entrenched competition can be gauged by looking at this Youtube video launched by Groupon yesterday. This announcement via social media by Groupon has been in direct reaction to its rival Amazon.com's announcement earlier this month that over the next couple of years it would be leveraging drone technologies to deliver parcels to customers.

In its video Groupon talks about how it will delve deep into Medieval history to derive inspiration for its delivery tool in the form of a modern-day catapult. The company also took pot shots at its bigger competitor through this quoted statement by its employee Everett Weiss who had played a major role in developing the catapult as a delivery channel for the company. "We are a technology company, but we draw the line at creating autonomous robots that buzz by your house, wake up your sleeping baby, who knows, take pictures of you in the shower,” the statement said.

Related News - Ratings Upgrade

Groupon stock won a well-deserved upgrade issued by Wells Fargo yesterday. Trisha Dill, the analyst from Wells who covers this e-commerce stock has also increased her price target for the stock to $13 to $14 per share. This upgrade comes on the back of better-than-expected third-quarter results by the firm and also reports of a even-better-than-expected beginning to the holiday season sales. She also upgraded her price target to between $13 and 14 from $5 to $6, the Motley Fool financial site reported. The analyst has been quoted to have said, “We believe Groupon is positioned well to take continued share in the massive local commerce market. We also view mobile commerce as incremental opportunities for Groupon, Given mobile users buy 50% more than non-mobile users.”

Stock Performance

Thanks to the latest vote of confidence from Wells Fargo & Co. (WFC), the stock of Groupon has been surging ahead on boosters. It has managed to post an impressive 11.55 percent increase in its valuation during trading over the past five days. This analyst-induced surge in value last week, reverses almost 12 percent depreciation that the stock had suffered during the past 90 days of trading. Casting an eye back at the mid-term time period of the stock, it has managed to post a solid 42 percent increase in its market value over the past six months. The appreciation that the shareholders of this stock have seen in the past 12 months assumes even further impressive proportions as it has clocked a 129 percent increase in market value in that period.

About the author:

Pushpa Naresh
I have done my MBA (Finance) and an avid market tracker.

Rating: 2.5/5 (2 votes)

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