Key points:
- After a request from Prescience Point, Groupon revealed a 2.4% stake in SumUp
- Prescience view the payment provider as a ‘tremendous’ investment opportunity
- While still backing Groupon, the firm lowered their price target to $69-99, from above $88
Groupon stock plummeted 20% in mid-market trading on Wednesday, after the company revealed its stake in payment-service provider SumUp. Following a request from investment research firm Prescience Point, Groupon revealed its stake to be 2.4%. Alarming shareholders who latched on to a previous belief that the stake was in the ‘mid-single digits’; Groupon stock tanked.
Prescience Point has outlined numerous times the instrumental value of Groupon’s stake in SumUp to the increase in company value – stating just earlier this week that there was a potential 225% upside on the basis of the company’s SumUp stake – thus provoking a further unique into the actual stake, which turned out lower than expected.
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Groupon has been passively investing in SumUp since 2013, yet in Q1 2020 the company sold 50% of its shares in the face of the global pandemic, resulting in a cash consideration of around $34M. Regardless of today’s sell-off and the fundamentals of the stake, Prescience Point still back their Groupon thesis, simply further highlighting the ‘tremendous value’ of the investment; timed well with SumUp’s funding round.
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The Firm stated:
“With any remaining conjecture laid to rest investors might now shift their attention towards a series of positive catalysts which will drive Groupon shares substantially higher in the short-term”
Moving forward, Prescience Point have lowered their price target of Groupon from above $88 to $69-99.