Groupon Inc. stock shares increased earlier this week by over 10% after a 9.9% stake in the company was purchased by a hedge fund. Tiger Global Investments discloses it had purchased 65 million shares in their securities filing Monday. Tiger Global is the owner of a small percentage of Facebook, Inc. as well.
Groupon was the pioneer of daily deals on the Internet, offering its subscribers huge discounts on things ranging from restaurant meals to spa sessions to treatment of skin and hair. To increase business, and attempting to set itself apart from other online copycat websites, Groupon tried to make itself into a local e-commerce company.
The company also sells electronics and other goods as well. However, revenue growth rates have declined on a steady basis since the company had an initial public offering last year, which has taken a big toll on the share price of the company.
Tiger Global purchasing a stake is a sign at minimum that one large investor has enough confidence in the daily deals company. Groupon announced the stake of Tiger Global in the company via a note to investors.
One investor said the purchase by Tiger Global is a sign that the stock might possibly be upgraded. Currently the stock has been set at a “Hold” rating.
The North American business of Groupon is quite stable quarter by quarter, though the growth has seen a slowdown from last year, said one analyst.
However, the European business for Groupon is a number of quarters away from stabilizing and has a number of significant issues that need to be dealt with.