Another earnings short-squeeze prospect is Internet daily deal provider Groupon (GRPN), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Groupon to report revenue of $639.59 million on earnings of 3 cents per share.
Just recently, Piper Jaffray analyst Gene Munster upgraded Groupon to overweight from neutral saying that the coupon provider's international business trends are improving and the rebound should cause the company to increase its revenue guidance for the quarter ending in March. Munster raised his price target on the stock to $8 from $5.50 a share.The current short interest as a percentage of the float for Groupon is very high at 14.2%. That means that out of the 222.41 million shares in the tradable float, 36.73 million shares are sold short by the bears. Any bullish earnings news could easily spark a solid short-covering rally for shares of GRPN post-earnings. From a technical perspective, GRPN is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last four months, with shares soaring higher from its low of $2.60 to its recent high of $6.17 a share. During that uptrend, shares of GRPN have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of GRPN within range of triggering a major breakout trade post-earnings. If you're bullish on GRPN, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance at $6.17 a share and then once it takes out its 200-day moving average at $6.28 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 15.25 million shares. If that breakout triggers, then GRPN will set up to re-fill its previous gap down zone from last August that started at $8.05 a share. Any high-volume move above $8.05 will then put $9 to $10 into range for shares of GRPN. I would avoid GRPN or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key near-term support at $5.53 a share and then below its 50-day at $5.21 a share with high volume. If we get that move, then GRPN will set up to re-test or possibly take out its next major support levels at $5.03 to $4.79 a share.
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