Brain Nichols : GRPN Presenting The Same Amount Value as AMZN. // Posted
Could Groupon Be the Next Netflix?
By Brian Nichols | More Articles | Save For Later
February 25, 2014
One thing we've noticed in this market is that accelerated growth often carries a valuation premium relative to its peers, and Groupon is quickly becoming the fastest growing e-commerce company. Currently, Groupon is trading at two times sales, and is expected to grow 21% this year. Amazon's growth outlook is similar, but at 2.15 times sales it is slightly more expensive. Thus, some might suggest that Groupon is presenting the same amount of value as Amazon. This coupon e-commerce strategy provides Groupon with a niche market, one where it has no competition, and this fact might mean that Groupon is in fact a good investment for the future, and that its 40% to 50% growth is sustainable.
As Warren Buffett famously said, "If a business does well, the stock eventually follows." This quote couldn't be truer, and with 50% growth in e-commerce, and in judging Groupon's potential market in this space, this is a company that's doing very well. Hence, it definitely has the opportunity to become the next Netflix