Groupon stock cheap enough to buy? Earnings report today

Q2 2012 earnings report is coming out today for Groupon following the closing bell. The stock has lost 70% since the Groupon IPO, but was up 12% on Friday trading session. Groupon earnings could make the prices jump higher on Monday according to quite a few analysts, who estimate a better quarter for the daily-deals company. For instance, a Morgan Stanley analyst has set the Groupon stock target price at $17, a quite optimistic prediction as GRPN stock is trading for $7.5 per share! On the contrary, the majority of Wall Street brokers maintain neutral views despite the expected revenues jump (46%) compared to last year’s $574 million. When last quarter’s earnings were announced in May, the Groupon stock gained 38% in a matter of 3 days. Is history repeating itself?

Groupon is another internet company that has lost a lot of its value since the initial public offering. Facebook and Zynga IPO’s come into mind with shares plummeting to new lows almost every week! It’s interesting to quote a comment from a MarketWatch article.

This piece of garbage was dead and buried before it went public. Groupon, Zynga, and Facebook are all pump-and-dump frauds waiting for funerals.

A comment that many other readers agreed with but early investors could easily doubt it. Yet, they are watching their money evaporating quickly in the last months. Some others believe that Groupon should have taken the Google’s $6 billion offer in 2010 following Groupon’s rejection to Yahoo’s $4 billion offer! Obviously Google shareholders are happy they dodged the bullet!

Technical analysis of Groupon daily stock graph

The recent Groupon IPO does not allow analysis of monthly or weekly graphs. Technical analysis can still be applied though on daily Groupon stock graph, where the latest support level is found at $6.50. The support level has been confirmed twice with 2 long filled candlesticks, one of which was printed on Friday. Other technical indicators are neutral, such as RSI hovering around 40% above the oversold conditions. Maybe it’s a risky trade to buy Groupon stock at this time, but considering the price action during the latest earnings report and the analysts’ prediction that the company will meet or beat the Wall Street estimates, a short-term swing trade shouldn’t be disregarded. Sterne Agee though may object to that, having downgraded its rating on Groupon from “buy” to “neutral” since Friday!

Would you be trading Groupon shares today? Would you buy Groupon stock at this low price or do you expect another breakout to lower lows? Let me know in the comments below.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in GRPN over the next 48 hours.