Monday, May 14, 2012

GRPN fireworks show (updated 11:41 am)

10:19 am GRPN beat estimates and the stock spurted to from 11.76 (closing price) to 13.47 in 4 minutes. The Fibonacci retrace for that range is 12.86, and GRPN dropped to 12.72. Now it's at 13.16.

Too bad for me I broke price discipline and jumped in at 13.30 instead of waiting for the bounce (StockGuy22 is a master at that technique). The good thing is, momentum is on the stock's side for a change. This is strictly a short-term trade, definitely no gimmie since it's already up 33% for the day.

The effect of GRPN's beat is tough to measure right now. LNKD, SVVC and GSVC trade very lightly after hours, and the spread is enormous. But it's not a bad guess that they'll gap higher in the morning.

Update 10:53 am Here comes the pre-Fast Money move on GRPN, back to 13.30. Could pop a little more or fizzle depending on what the FM panel says. I expect a mixed bag from them. Nobody really likes the company's business model, but short-term momo is with the stock.

Update 11:07 am GRPN conference call underway, stock hit 13.44. Nearly sold half at 13.23 before the call. Hear it here. They've added more customers in Q1 than 2011 Q4, cut marketing costs big time. margins are 7% compared to a loss previously. They also have $1.2B in cash money. And 75% revenue growth in N. America. (info from Brian Bolan (@bbolan1)

GRPN now at 13.50. Looks like the shorts and pessimists have to acknowledge a better business model now.

Upate 11:12 am More info via Brian Bolan (@bbolan1) ... GRPN has added board members from AXP and Deloitte - deep financial and operating experience ... 30% of deals were done on mobile compared to 25% four months ago ... now does 1.5M purchases ... high online satisfaction survey, strong rollout of new merchant systems (Groupon rewards) - 2,500 merchants signed up ... more than 100K unique merchants in the quarter ... intl on a different technology platform, which is why the growth in NA was better ... first tech initiative underway ...

With 8.4% short interest, the covering is well underway, as well.

Update 11:41 am Got skittish and sold the position at 13.56 as it dipped (+0.26/share). Gave up a lot of paper profit after the run to 13.80, but I got a small profit on a quick trade, cannot complain about a + trade.

Always tempting to hold an earnings winner, but this run from 9.90 (yesterday's close) is massive and there will be fluctuations as traders take profits and new retail dives in. I'd rather play the swings than hold from 13.30. If GRPN is at 20 soon, then I'm wrong and it would be better to just buy and hold. But if it bounces between 13 and 15 all summer, it's a nice way to play the social trade.

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