IMO, the dumbest thing you can do in stocks is short a stock with large upside potential, like GRPN, esp. in an overall strong bull market. If you’re going to short stocks at all, at least short stocks with huge market caps, or stocks that are at or near highs on little other than pure hype and speculation. One stock that I felt got way too high, and I did a bearish option trade on was NFLX in the summer of 2011. The stock was simply worth more than it should have been. If I remember right, it was $300ish at the time. It eventually fell to $60ish. That was too low. It would have been stupid to short at that price. Too bad, I wasn’t aggressive enough to buy the stock or its calls. Anyway, GRPN is a stock with huge upside potential. Expectations are low; short interest is high. The stock’s recent trend has been up. Let the trend be your friend. This is a very nice setup for a serious rally. Ignore at your own financial loss. Have a nice weekend.
i get where you're coming from but this is a diff scenario...i would say the only reason grpn is $6 is cause of hype...all grpn does is lose money..it never makes a profit..its mind boggling that this stock exists..and $6 is the high for this thing..it hasnt been $6 since last august!..usually when a $6 stock goes bad it goes to $5..grpn has shown the ability to go to $2....i just cant see a world in which idiots are lined up with their hard earned money to buy this stock at $7 or $8..people cant be this #$%$..so where is the upside??.seriously??
Starbucks deal Over 100,000 bought, this deal alone will generate good revenue. It also has ripple effect. It will sign up more users to use Groupon because these new users want the Starbucks deal. Also, after getting a good deal at Starbucks, they feel good, ended up buying more deals. Have you ever been to a shop that has big sale, you bought one item with big sale and ended up buying second item at full price, thinking it is okay since you got a really good deal from the first item, in retail, it is called lost leader.
Part of their upside potential is their rev. growth, which will lead to income. And their market cap is just $4 bill, compared to rev of $2.3 bill- a very respectable ratio. $2.3 bill in rev is a lot more than mere hype. If you look at analyst est for FY 13 and 14, they aren’t bad at all. Yet, very few brokers rate them a buy. So, there is plenty of room for upgrades. And the overall market is very bullish, which usually pushes stocks like this up a bit more than the huge market caps (GE, MSFT, WMT etc.). I admit, I could be wrong, but I really think even if this stock comes back down eventually, it’s going to $10 or more first. As far it being speculative, it’s always a little spec. to buy a stock that IPO’d in the past 3 years, but it can be smart too, and GRPN has the rev growth and lack of debt to make it worth a little risk. Besides, GRPN is an EXTREMELY far cry from those super high-flyers in 2000. And with their amt of cash on hand and their .15 debt to equity ratio, I hardly think bankruptcy is coming anytime soon.