This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The Five Dumbest Things on Wall Street This Week: Dec. 14

Stocks in this article: NFLX GRPN HBC SPPI BRK-A

4. Gravity Grips Groupon

Forget rhyme or reason, it was a bunch of idiotic rumors that caused Groupon's (GRPN - Get Report) stock to defy the market's gravitational pull and levitate 23% last Friday. And it was a dose of good sense from Evercore analyst Ken Sena that brought it back to earth.

Shares of the online deal site descended 9% Monday to $4.25 following Sena's note dispelling the inane chatter that lifted the stock the previous trading day. The heavily shorted stock (about 21% of its shares) apparently was squeezed higher on a swirl of silly speculation, according to Sena, including talk of a Google (GOOG) acquisition.

Why were the market's old wives telling tales of Google purchasing Groupon, a company that it considered buying two years ago for $6 billion only to see its offer rebuffed by Groupon's puffed-up CEO, Andrew Mason?

Simple, because Mason was reportedly canceling a public appearance this week (untrue) and an article on Bloomberg chirped the idea that Google might be interested in a second look now that Groupon's enterprise value has fallen below $2 billion (talk about flimsy).

Yeah, those were some pretty dumb sparks indeed that lit the fire under the stock, now down 84% from its high-profile IPO last year. Nevertheless, sometimes that's all it takes.

"We see Google and other would-be acquirers as believers in 'network effect,' which argues against renewed interest, given the current pace of Daily Deal deterioration, which we peg at negative 20% quarter on quarter, excluding the effect of other contributing factors," wrote Sena, who kept his $3 price target and his "conviction sell" rating on the stock.

Sena added that the recent mass layoffs at Groupon competitor LivingSocial also bode ill for any real buying interest from Google.

"It would make sense to us that the company may be exploring strategic alternatives. However, we see this as a very speculative argument for Groupon given the sizable pressures the industry is undergoing," wrote Sena.

Thanks for injecting some truth into the discussion, Mr. Sena. We're glad somebody finally got a grip on the stark reality facing Groupon.

2 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs