Global Sun Solutions: Groupon’s transition from deal-of-the-day emails to online marketplace highly likely to yield strong stock gains.
Shenzhen, China-based, e-commerce-focused broker-dealer and investment house, Global Sun Solutions says it remains bullish on the prospects for daily-deals-by-email online retailer, Groupon Inc.. The Chicago, USA-based website which is still in the throes of restructuring its business model to rely less on email shots and more on its value as a marketplace where customers can search for products, revealed better than expected sales for the third quarter.
“Email is nowhere near as widely-used as it once was and, with smartphones and tablets becoming far more active in terms of online shopping, it made far more sense to shift to an online marketplace,” said Steven Aaron, Vice President at Global Sun Solutions. “We’re pleased to see that non-email revenue at Groupon has surged by 23% since Q4 2011 while email-sourced revenue has fallen by the same percentage,” Aaron added.
When Groupon went public, nearly 50% of its business came from emailed deals. Today that figure is less than 25% but the transition has not been without its growing pains, particularly for shareholders who bought into the IPO at the debut price of $20 in November 2011 only to see investor concerns over the viability of the daily-emails model push prices down as low as $2.76 a year later.
Global Sun Solutions says it intends to raise its investment rating on the stock to outperform and has raised its price target to $10 from $8.
“We fully acknowledge that Groupon has much further to go in terms of this restructuring but things are progressing as well as could be expected given they’re running both business models simultaneously. We expect big improvements in 2015,” concluded Aaron.
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