• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

Priceline Could Be the Top Contender to Buy Groupon

Other possible suitors include Alibaba, Alphabet and more.
By DARIA SOLOVIEVA Jul 09, 2018 | 01:50 PM EDT
Stocks quotes in this article: GRPN, BABA, GOOGL, GOOG, FB, IAC, QRTEA, YELP

Groupon (GRPN) has seen its stock slide downhill in the past year by 15%, has struggled to pin down its business model and posted uneven first quarter revenue. So, who wants to buy a company like that?

Among the companies reported as potential suitors are Alibaba (BABA) , Alphabet (GOOG) , (GOOGL) , Facebook (FB) , IAC/Interactive Corp. (IAC) and Qurate Retail Group (QRTEA) .

But D.A. Davidson analyst Tom Forte sees Priceline.com parent Booking Holdings Inc. BKNG is the most likely buyer, followed by Alibaba, Alphabet or Facebook. D.A. Davidson believes Priceline could buy both Groupon and Yelp Inc. (YELP) to support its local-commerce effort -- Groupon for e-commerce and Yelp for advertising.

Many Changes, Little Impact

Groupon, which went public in 2011, made series of changes in the past couple of years without the market taking much notice.

For instance, the company now offers a better consumer experience. "They made Groupon easier to use with Groupon Plus initiate," Forte said. "They are starting to get traction on selling products at full price, which makes Groupon more valuable for merchants."

However, GRPN also decided to scale down its international operations. The company is now active in 15 countries, compared to 50 a few years ago.

"If I was on management team, then I might be pretty frustrated," Forte said in an interview with Real Money. "I would think this was the best way to maximize shareholder value."

Falling Revenues

While the company posted declines in its local and goods revenues in the first quarter, D.A. Davidson views that as a temporary setback and believes Groupon's overall vision remains on the right track.

In the first quarter, Groupon's total revenues dropped 17% compared to a year before to hit $393,256. Its Groupon Merchant business, listed as Goods in its financials, retreated 26% in the first quarter year on year.

Finally Getting the Model Right?

CEO Rich Williams told investors on Groupon's latest earnings call in May that the company's coupon model was better suited to local e-commerce -- and more successful than efforts by Facebook and other would-be entrants who tried to match Groupon in local commerce.

"Lots of people have tried to play as we play in the local space, [but] we've seen almost all of them fail," Williams said. "A big advantage that we've had is we've built a lot of competency and we've built some tools. We have a lot of software and a lot of data from selling almost a billion-and-a-half Groupons on how to connect with small businesses in a way that works for them -- in a way that can help them grow, in a way that drives transactions for them."

Alphabet Overture

In autumn 2010, the still private and fledgling Groupon turned down a $6 billion offer from Google, now known as Alphabet. Instead of accepting the deal, GRPN raised $700 million in a November 2011 initial public offering.

It was the second largest IPO in history, trailing only Google's $1.7 billion in proceeds in 2004. Groupon even reached a valuation of $16 billion on its IPO day.

Now, Alphabet might consider making another bid for Groupon in its ambition to go more local. Forte said GRPN's local-merchant data and relationships could help Alphabet generate lots of ad sales. After all, Groupon had 46.9 million active customers as of 2018's first quarter, and consumers have downloaded its mobile app more than 177 million times.

In its quest for search-engine dominance, Alphabet might decide to just go it alone. Forte cited a long-running feud between Alphabet/Google and Yelp after Google failed in 2009 to reach a deal to take Yelp over.

IAC/Interactive Corp. is also being muted as a potential buyer. Joey Levin, the CEO of IAC, has been on the board of Groupon for several years.

(Martin Cassidy contributed to this column.)

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
TAGS: Investing | U.S. Equity | Mergers and Acquisitions | Stocks

More from Investing

Marveling at the Market's Move? It's All About Momentum

James "Rev Shark" DePorre
Jan 19, 2021 4:41 PM EST

No news can explain the action -- whether the bears believe it or not.

Surface Oncology Is Set for Further Gains - How to Buy It

Bruce Kamich
Jan 19, 2021 3:25 PM EST

Here's our price objective.

My Preference With OneSpan Is Calls So I Can Define My Risk

Timothy Collins
Jan 19, 2021 2:36 PM EST

The last few post-earnings beat downs were greeted with optimism once traders got over the initial disappointment.

A Top Biotechnology Play for 2021

James "Rev Shark" DePorre
Jan 19, 2021 2:07 PM EST

Forte's sole clinic candidate is FB-401 for the treatment of atopic dermatitis, which is the scientific name for eczema.

Boot Barn Gets a Quant Upgrade: Do the Charts Fit?

Bruce Kamich
Jan 19, 2021 1:53 PM EST

Here's our latest analysis and trading strategy for the shares.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:09 AM EST GARY BERMAN

    Is Copper About to Turn to Rust?

    Below is a very long-term copper chart.  As you...
  • 08:02 AM EST GARY BERMAN

    Tuesday Morning Fibocall for for 1/19/2021

    SPX (Long-Term View) The 1/8/21 high @ 3826.69 i...
  • 09:01 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    When it's time to sell, will you act or freeze?
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login