Groupon (GRPN) is once again the subject of some takeover talk, but the circumstances this time are quite different than they were back in 2010 when Alphabet (GOOG) , (GOOGL) offered $5.75 billion for the company.
Groupon felt then that the offer was too low, which seemed like a smart decision at the time. After all GRPN went public a year later and ended its first trading day at around a $16 billion market cap.
Unfortunately, it's been downhill since then, with Groupon's market cap now around $2.6 billion (a little more than half of what Google offered eight years ago). Groupon executives have tried a number of initiatives to produce the growth that they foresaw -- but when that didn't work, they cut some business areas and withdrew from around 30 countries in hopes of increasing margins.
And now, Recode is reporting that GRPN is reaching out to companies like Alibaba (BABA) and IAC (IAC) for some sort of deal. Groupon was up nearly 14% earlier Monday on the news, but has been selling off and is only ahead 5% as I write this.
GRPN isn't necessarily a bargain unless someone can find a way to reignite the growth prospects that seemed so bright eight years ago. Earnings are forecast to grow to $0.24 a share in 2018 from just $0.11 in 2017, but Groupon currently sports a generous 34x trailing price-to-earnings ratio.
So, the company doesn't appear to be in a strong negotiating position here, and it's unlikely that the Recode news will create strong demand for the stock. GRPN is essentially a value play here -- but it isn't that cheap.