Groupon: Is Wall Street Paying Attention?

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Groupon (GRPN) was just downgraded “from hold to sell.  The company’s weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself,” says The Street.

A “generally disappointing historical performance.”

That’s interesting.

Perhaps The Street isn’t paying attention…

Groupon (GRPN)

The stock went from being a “goner” and “the worst stock to 2012” to being loved by the $8 billion Tiger Global hedge fund, Sterne Agee, Piper Jaffray and Legg Mason’s Bill Miller.

JANA Partners, an activist hedge fund, just picked up 22 million shares of Groupon for $150 million.

The stock has stabilized, moving well above $7 a share.

The company gave the boot to its horrific CEO and beat earnings estimates.

And co-CEOs Eric Lefkofsky and Ted Leonsis believe the company can evolve into a $100 billion giant.  While that may seem unreasonable, here’s what Sterne Agee had to say:

“For a company with a billings run-rate of $6B and only 4 years of operating history, the desire to reach $100B may seem far too ambitious, especially given the current international challenges.  However, GRPN has reached a $6B run-rate and 41M customers in a fairly short period (4 years) and its international business is less than 3 years (11 quarters) old. In comparison, after 4 years of its history as a company, Amazon … had a top line run-rate of less than $1B and only a few million customers.”

Although the stock remains far below its IPO price, Groupon is going places.

I’m still not sure what The Street – or Wall Street – is watching…