Groupon is a very important firm in the e-commerce landscape because people can find a lot of discounts on this website. Today Groupon has jumped a lot, and you will know the reason why this happened. So read on to find out more about this interesting situation that occurred today. There are many reasons why the market has reacted in a favorable way to Groupon including better marketing perspective and better management of the firm. The market tends to believe a lot of things, and Groupon has enjoyed the positive view of the market today because the company might be doing the right things in the future.
Better Perspective for Groupon
The market is excited about Groupon`s new management, as the market believes that this new management can turn Groupon around in some way. Rich Williams in Groupon`s new CEO and this new head of the firm wants to stop the firm from chasing a low-margin opportunity as well as streamline the whole company. The market also believes that the firm will increase its spending on marketing to boost the firm`s business down the road. People should not buy a stock just because an analyst has upgraded or downgraded the stock. In the case of Groupon, Samuel Kemp upgraded the stock.
Increase in Marketing Spending
Groupon will spend up to $200 million into the firm`s marketing strategy in 2016 to acquire even more customers. The goal is producing up to 4.5 million of new active customers for the company over time. Since investors are latching onto Groupon`s stock, this stock has experienced an upward trend today. However, Groupon will have to execute to make this new price target worth the money that investors have put into the firm`s bottom line. There is also a billion-dollar stock opportunity that investors need to be aware of these days.
You might not believe that just two months ago, two Wall Street analysts just blasted Groupon stock with some negative notes. They said that Groupon has been deteriorating its business, and they even added that this stock was just a work in progress. Anyway, banker Piper Jaffray has just upgraded Groupon stock to overweight, as he believes that this stock is just due for an important revival over time. Mr. Jaffray has just pointed out that Groupon can generate gross profits by spending heavily on marketing to acquire new customers down the road.
As you can see, Groupon stock is more expensive today, as the market believes the firm will be able to generate more profits in the future. Since the company will be spending more money on marketing, this could be a very positive step towards the generation of millions of new customers down the road. In addition, the new CEO said that he will work hard to get rid of any low-margin opportunity that the company might want to chase in the future, and that`s another important thing that you should bear in mind. The CEO also wants to streamline the firm, so we can expect that things will change at Groupon for the better.