NEW YORK (TheStreet) -- Groupon
(GRPN - Get Report) has a strong business model with expanding mobile app downloads, brand recognition, explosive growth potential, cross-selling capability and first-mover advantage.
It also has Eric Lefkofsky commanding the ship. He may be good or even better than good, he's not good enough. The stock has been falling and is now down nearly 34% for the year to date, as of its Monday close of $7.78.
If Groupon was a $50 million company I might like Lefkofsky better, but for a $5 billion Groupon he isn't right for the job (although based on that stock performance he's better than Andrew Mason, whom Lefkofsky replaced about a year ago.) Lefkofsky clearly embodies many skill sets, but marketing isn't one of them.
If you're a current shareholder I feel for you. A crash like Friday's is tough to take, and I think it's fair to call a 22% one-day drop a crash because it sure wasn't a soft landing. Usually when a stock implodes from an earnings announcement it takes one or two more sessions for the market to fully discount what happened.
If the company's board hired experienced effective management, I would buy shares with both fists. I like the model and the shares offer a compelling risk to reward proposition. However, absent new blood, I don't envision a change of course in the company or stock anytime soon.
Still, by Wednesday or Thursday, Groupon may demonstrate a base of support and investors should see an up day for shares. In fact, I posted a Real Money Pro trading idea for active traders that may complete its setup as early as Wednesday.
For day traders and overnight swing traders that's fine and dandy, but what about long-term investors? I'm bullish in the long term, but it's going to take time, and the company needs changes at the top. Lefkofsky owns enough shares that it's more or less up to him if he wants to step down or not. Maybe he owns a sufficient number of shares that financial considerations will outweigh his desire to remain at the helm.