Due to long term competitive advantage threats, Groupon (NASDAQ: GRPN) may not be the best oppurtunity in terms of long term investment options. Both Amazon (NASDAQ: AMZN) & Google (NASDAQ: GOOG) have made recent attempts to try to capture a bit of the daily deal market. However, at this point in time, they have both failed to take any substantial stake in this market. Despite being down 64% year to date, Groupon seems to be of fairily reasonable value now, meanwhile the company continues to strengthen its hold on its market and expand its geographic reach.
Current market conditions show a battle between bulls and bears. The companies that have the resources to compete in this market are generally the blue chips which are able to utilize their vast resources to continue to grow. These companies are also able to increase investor confidence using tools such as share buy backs and increasing dividends. Another type of company that should be able to thrive in current market conditions is one designed to save consumers money. Consumers are desperatly trying to cut down on their costs, fortunately Groupon offers an excellent service that can both help a struggling small business and offer discounts to consumers. Both of these services seem very applicable considering the current state of business.
Groupon has the business structure and mobility infratructure in place to target the masses and thrive during a stalling economy. It could actually be argued that this is one company that would do better during a slowing economy as opposed to a thriving one in which people are less price conscious. FINVIZ qoutes Groupon’s Forward P/E as 11.45 based off of the company’s guidance. This is a great value for a young company that has the potential to grow many times its current size. FINVIZ also quotes that insider buying has increased by 10% in the last months, this shows confidence from within the company. Groupon seems like an excellent buying opportunity as long as one keeps an eye on the competition. I expect Google and/or Amazon to eventually gain ground, but at this time Groupon is leaps and bounds ahead in this particular market.
I have recently moved to Vancouver, BC, and have been impressed with their exposure and use in this urban mega center. I expect the company’s international exposure to continue to grow. The ease in use of their mobile platform allows them to target a young and adapting population. While I have not purchased a Groupon yet, I was surprised at how many offers were available just in my neighborhood after doing some research last night. This puts Groupon in a “Win-Win” category for me, as I not only have made an investment in the company but I will also plan on using its services.