Bulk of its Revenues Coming from Outside the U.S. Makes Groupon a Gamble, According to Leading Financial
According to George
Leong, contributor to Profit Confidential,
Internet-related stocks are not an easy place to make money. The latest
casualty of the downward spiral in Internet stocks is Groupon, Inc., which according
to its second-quarter earnings reports, cratered over 20.0% to a record low at
below $6.00 after a revenue shortfall of $7.0 million. Leong believes that
because Groupon makes about 60.5% of its revenues from outside the U.S., and
given the dismal situation in Europe, this makes the stock a risky investment
opportunity.
In the article “Why Playing Groupon’s Akin to Betting,” Leong thinks that those looking for a high-risk investment opportunity may want to take a look at Groupon.
Leong says that he is not ready to write off Groupon, and he sees a potential
investment opportunity here; however, he says, investors need to make this
decision for themselves.
Leong thinks that the
big risk that is now appearing is the inconsistency of revenues and the fact
that there are numerous rivals emerging that offer or will pose a threat to
Groupon’s business.
But Leong still sees a
possible investment
opportunity.
The Profit Confidential contributor does acknowledge that there are lawsuits that allege Groupon has not been truthful in its communications to investors.
“As such, the
investment opportunity risk is high, especially if Groupon is found to have
additional internal control issues,” he says.
Leong thinks that
Groupon should only be viewed as a contrarian investment opportunity at this
time.
“But the stock could surge if there aren’t any further surprises and if the company can fend off rivals,” concludes Leong.
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market...before it plunged.
