The logic behind Groupon's soaring market capitalisation

One of the key arguments for group buying is that Groupon's share price hit a Waterloo, with Groupon closing at $2.76 trillion on November 5, 2012, the peak of 1/10. But Groupon's share price has continued to rise in the last six months, as of June 28, 2013, when Groupon's shares were $8.55 trillion, with a total market value of $5.41 billion. What is the logic behind the return of Groupon's market capitalisation to more than $5 billion trillion? Pugo read for you as follows:

Foundation: Obvious Market lead

One important indicator of whether an enterprise is competitive is market share, and Groupon maintains a clear lead from the American group buying market. For example, with a 2012-year revenue scale, Groupon has achieved revenue of $2.33 billion a year, while Groupon, the second-ranked group-buying site, LivingSocial only 540 million dollars. The other big internet technology giants such as Google offers, Amazon Local and Bing offers are not very well developed, and Groupon does not pose a real threat. The problem with Groupon is that its growth rate is slowing and it is hard to make steady profits from international business, but even so, with Groupon's $2.33 billion trillion in revenue volume and market lead, it has a solid foundation for its market capitalisation to return to $5 billion trillion.

Credit: Big investment banks to help endorse

The immediate reason for Groupon's recent surge was the June 14 Deutsche Bank raised its Groupon rating from holding to buying. A period of time before and after Groupon's IPO in 2011, it made the mistake of incorporating the unfinished purchase list as a revenue, due to financial breaches of U.S. GAAP, and Groupon was investigated by the Securities and Exchange Commission because of repeated revisions of financial data. Groupon left the capital market with a bad impression that its shares had been sold and its share price had been low for a long time. Groupon's early days because of the credibility of a number of market capitalisation is low, as long as there are large investment bank or large companies to issue a buy rating or shares, give the market a certain degree of confidence, Groupon's market capitalisation has a full recovery of space. At the end of 2012, Groupon's shares began to show a steady upward trend as the tiger World bought Groupon shares, and Deutsche Bank recently gave a positive rating equivalent to Groupon's endorsement, pushing Groupon's market capitalisation back to more than $5 billion trillion.

Direction: Continuous deepening of industrial chain

Groupon has more than 40% of gross margin, but not profitable, which makes many people directly look at the whole group buying mode, the high human cost is the main reason for Groupon losses. To carry out group buying business, the number of merchants and the number of sales representatives needed overall proportional relationship, simply by increasing the number of cooperative merchants can not solve the key problem of profitability, to provide more in-depth services for merchants is more desirable direction. Groupon is starting to get rid of a single service that only offers advertising to businesses, with Groupon Payments in September 2012, followed by the launch of the ipad version of POS devices in October, offering mobile payment and POS solutions to a growing number of merchants Groupon also acquired a restaurant reservation and comment service savored, dabbling in online booking areas. From Groupon's layout, it continues to deepen the industrial chain, trying to provide local businesses with a one-stop marketing, customer relationship management, payment processing services, can provide more ways to achieve profitability.

The future: The mobile end occupies the opportunity

Mobile Internet is the future, Groupon's development in the mobile end is very good, has accumulated a considerable advantage, this is one of the important reasons for the capital market to look back on Groupon. Publicly available data show that Groupon's 25%;comscore of the total trading volume in January 2013 showed Groupon's flow rate from the mobile side reached 69.1% in February 2013. By March 2013 Groupon's 45% of North America's total trading volume came from the mobile end, while Groupon's app downloads were more than 7 million times in the first quarter of 2013. In every way, Groupon has taken the lead on the mobile side, and its mobile side is stronger than the PC side. Life Service Group is more suitable for the mobile end with position attribute development, from the promotion effect, Groupon from mail to client promotion, so more efficient, and also can save market costs, can help Groupon future profitability.

Good Foundation, there are investment banks to do the endorsement, the right to profit, coupled with the opportunity to occupy the mobile end, Groupon's market value is gradually picking up, the quality of advice to the 2012-year revenue scale, Groupon's reasonable market value of about 7 billion U.S. dollars, there will be a certain increase in the future. For Chinese group buying peers, Groupon's market capitalisation rally is a positive signal; But at present, whether it is the United States, the public comments or handle nets, the size of the revenue is still too small, short-term listing is unlikely; At this stage, the domestic group buying site can do is to increase the gross margin and revenue scale, increase the depth of the layout of the industrial chain, Accelerate the transition to the mobile end. The day the Groupon returns to $10 billion, Chinese group-buying peers will hit the IPO again.

[Huang, research director, Internet industry analyst, micro-credit public, "Universal Society" (Micro-signal: Puji-she)]