Shares of daily deals site Groupon (NASDAQ:
) have exploded on Friday.
The stock has seen a number of high volume breakouts
throughout the trading day and is attracting a lot of attention.
At last check, Groupon was up around 18 percent at $4.48. Volume
has been above normal as the stock attempts to take out highs hit
last month in the $4.54 range.
The reasoning for the move in the stock is unclear, but it is
a safe bet that there is some short covering going on during the
session. In recent days, as much as 12 percent of the float had
been sold short. Bloomberg reported on Friday that hedge fund
Tiger Global Management had acquired a 9.9 percent stake in the
company. This is unlikely the reason for the spike in the stock
price, however, as it was reported by Bloomberg and other news
outlets on November 20.
Groupon has been an abysmally performing stock in 2012,
falling almost 78 percent. The company went public at $20.00, and
the shares now fetch just a fraction of their IPO price.
Certainly, pessimism surrounding Groupon may have finally hit a
crescendo and today's huge rally could be the start of a rebound
in the stock. In recent weeks there has been speculation that CEO
Andrew Mason could lose his job at the Chicago-based company.
The market seemed to be enthusiastic about this possibility as
Groupon shares rallied on the reports. After a board meeting,
however, reports indicated that Mason would hang onto the top
spot at the company he co-founded for the time being. Currently,
there does not appear to be any takeout rumors which could
account for the jump in Groupon shares on Friday, but at current
valuations, a deal might be a possibility.
At one point, Google (NASDAQ:
) was aggressively trying to acquire Groupon and in light of the
plunge in the stock price and pressure on management, a buyout
may not be totally out of the question.
The stock has been very volatile in the past, however, and
Friday's move is not unprecedented. It is also possible that a
large fund may be building a stake in the name currently, and day
traders and other short-term market players are adding to the
momentum and volume in the shares.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.