January 19, 2012, 1:55 PM — With nary a catalyst in sight, shares of Groupon (NASDAQ: GRPN) have gained nearly 13% in trading this week.
Shares reached 21.99 in early trading Thursday, a gain of 6.9% over Wednesday's closing price of 20.57. The stock eased back by early afternoon to 21.56, which is 12.6% above last Friday's 19.15 close. Trading volume this week was not out of the ordinary.
So clearly someone's liking the daily-deal site's prospects this week. But why? Groupon hasn't announced any positive news, and no beneficial rumors are floating around.
In fact, the only "news" regarding Groupon this week actually addresses the larger daily-deals market, and the news is bearish.
According to a study by Daily Deal Media:
The total number of deal publishers dropped 7.61 percent in the last 6 months of 2011. The world has 798 fewer deal sites due to consolidation and startups closing up their virtual shops. Asia saw the largest drop, with 1,348 daily deal sites exiting the industry.
Maybe investors are interpreting the numbers as favorable for Groupon, which now faces less competition due to acquisitions and attrition.
But the tiny start-ups that couldn't survive weren't competing with Groupon in a real sense to begin with. The Chicago-based company is an 800-pound gorilla in the daily-deals space, with a presence in more than 250 markets globally. Only LivingSocial has comparable assets and marketing heft.
The people snapping up shares of Groupon this week seem to have temporarily forgotten that the company is losing money and facing growth challenges. Until Groupon shows some hard numbers when it releases fourth-quarter earnings results on February 8, it's much smarter to hold off on buying shares.
Groupon went public on November 4, offering shares at $20. After topping $31 on the first day of trading, the stock fell below $15 by the end of the month. Shares have been below $20 for most of January.