Courtesy of Benzinga.
Shares of daily deals site Groupon (NASDAQ: GRPN) 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: GOOG) 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.
