Groupon Jumps as Prescience Point Says Business Is Undervalued

This post was originally published on this site — Groupon Inc (NASDAQ:GRPN) shares jumped at the open Tuesday on the back of a research report from Prescience Point Capital Management that said it believes Groupon shares are worth 2.7 to 4.3 times the current share price.

The investment research firm said in its note that Groupon is a misunderstood company “that has been wrongly left for dead due to an antiquated bear thesis and apathetic sell-side.”

“Market participants have completely overlooked the sizable value of Groupon’s investment in SumUp, a fast-growing fintech with a 50%+ revenue [compound annual growth rate], which we believe is worth at least $268m (and growing) or close to 40% of Groupon’s current enterprise value,” said Prescience Point.

Groupon shares have fallen over 33% in 2021, with analysts at JPMorgan and Barclays lowering their price targets in the past few weeks. Earlier this month, Barclays told investors that Groupon’s Goods and Travel categories “may never recover.”

Prescience evidently disagrees, saying the market is “significantly undervaluing Groupon’s core business, whose recent turnaround has been overshadowed by pandemic related shutdowns and a recent change in revenue recognition accounting that makes it look like revenue got cut in half.”

“We believe shares are worth 2.7x to 4.3x the current share price,” they added.

Groupon shares are up 7% from Monday’s close in morning trading.