I know that plenty of longs will bash this post, however all I am asking is for all of you to wait and see if my call succeeds or fails. If I am wrong and it fails, then bash all you want. I want to share what I believe is an opportunity to make a lot of money in a span of less than a month.
I have been long in GRPN up until yesterday. I sold my position of 4400 shares at yesterday's close at $9.71 per share. I know it wasn't a huge position, nonetheless, I made a nice return. I have turned negative (In the short term) on this stock. I have done plenty of research and DD. The chart looks absolutely horrible. It broke through its 50 DMA late last week, and today is trading below its 100 DMA. Its 200 DMA is $7.70. Also, this stock has been down now for six consecutive trading days. Yesterday you could have argued it was because all momentum stocks were down, however not today. Two days ago you could have argued it sold off because of ITG, not today. A few sessions ago, you could have argued that GRPN was down because of EBAY's earnings disappointment, again not today. In fact, all momentum stocks are up today while GRPN continues to drift lower. On top of that, the past six trading sessions has seen GRPN sell off drastically moments after the market open then level off the rest of the day. Add in how violently volatile this stock acts after every past earnings release and you get a chance for quick profits. Finally, I will get to my main point which is my play. First, let me say it is a risky one, however the risk vs. reward ratio makes it well worth it IMO.
With ZNGA and AMZN reporting after the close today (I believe both will disappoint on outlook) I would buy (and plan on doing so) the GRPN November $8.00 PUTS. Currently, they are quoted at 0.26 per contract. 100 contracts would cost you $2600. I believe that by the November expiration GRPN will be trading around $5.00-$5.25. If I am right, your profit will be over $20K
If you think charting a stock will make you rich...then I'm sure I can also sell you some building lots on the North Pole. Right now GRPN is in a QUITE period before earning, they can't say squat about the company before 11/07/2012 - It seems many speculators are taking the chance to short GRPN thinking this Q. will suck like the last one, if it does you win…but if GRPN makes good with this Quarter the stock will be an easy $15.00 per share. It will jump up $2 to $3 Dollars in the first 2 days after the release, then $15 with short covering.
For the June 30 Q. 2013 GRPN revenue was about 608.7 MIL.
Net loss ($7.5 Mil.)
Now my take: This quarter ending Sep. 30 2013, GRPN Rev. will be $920Mil, with a positive gain of $90mil and maybe more.
lol, while I think GRPN will beat estimate this quarter, 920Mil revenue seems to be a very very long shot... Possibly 619-620mil is my guess.
This is about the best entry price if you want to hop in this stock, otherwise, there are plenty of other stocks to invest in.
Sentiment: Strong Buy
Technical is bearish. Fundamentals never changed. Rumors and hedge funds can turn technicals down, but they can't change the fundamentals of the company...
Some people buy when the chart looks good (pay premium) but I like to buy when the chart looks bad (discounted share price) if I believe in the company's fundamental.