Why Groupon Shares Bounced Back
Mar 1st 2013 3:35PM
Updated May 23rd 2013 5:05PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Groupon rebounded 15% from yesterday's earnings-related beating after the embattled online deals company fired its quirky founder and CEO, Andrew Mason.
So what: The shares have been pummeled over the past two years as controversial metrics, declining revenue growth, and slowing consumer interest have all brought the company's long-term viability into question, so the change naturally serves as a much-needed catalyst for a turnaround. But while a new CEO may bring a more focused approach to the table, the intensifying competitive and secular headwinds that Groupon faces might be too powerful for anyone to handle.
Now what: Groupon said that it has started an official search for a permanent CEO, with Co-founder/Chairman Eric Lefkofsky and Vice Chairman Ted Leonsis serving as interim co-CEOs in the meantime. "This leadership change gives you some breathing room to break bad habits and deliver sustainable customer happiness -- don't waste the opportunity," wrote Mason in a refreshingly candid letter to his employees. Given the tremendous uncertainty that still surrounds Groupon's business model, however, buying into that opportunity doesn't seem prudent at this point.
Interested in more info Groupon? Add it to your watchlist.
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