Groupon (GRPN) is up 150% in 2013. It's been a very good year for the daily deal company.
The stock did stumble this fall, dropping from $12.60 in September to $8.75 at the start of this month. And now we've had a 32% gain in Groupon in December.
The stock's selloff was precipitated by news that Ted Leonsis and some others in management had sold some of their personal stock holdings in the company. Then there was some discussion by the company about challenges in the current quarter.
Now the stock is back to near 52-week highs. And the natural question is, where does it trade from here?
If the selloff was due to worries about the current quarter (even before the company announced them), we are now apparently past that and looking ahead to 2014.
The good news for bulls like me is that two things are working in favor of Groupon as an investment:
- Fixing Europe. This has been a black hole for the company for the last two years. It's been a constant drain on the company's profitability, and it has masked how well Groupon is actually doing in North America. Look for this to be finally fixed this coming year.
- More and more mobile. Recently, more than 50%s of Groupon transactions in North America have been enacted from a mobile device. This signals just how much this company has shifted from a "push daily deal email" model to a new "pull location-based deals happening now" model.
If just these trends continue to play out, the stock should be able to hit and pass $20 in 2014.
The company will also need to show that it can actually make a little money from the goods business and from its new Kentucky distribution center. The bears in the stock continually harp on this as something that will pull down the company's already-thin margins.
I'm sure the successes of Facebook (FB) and Twitter (TWTR) in the past month haven't hurt Groupon's stock either, but there should be some more good signs that this business will continue to come back from the dead in 2014.