Friends, countrymen, degenerates — lend me your tickers.
I come to tell you that Groupon is not dead. I know. I was as surprised as you. I had filed the obituary, sent flowers, spoken kindly of the deceased at the luncheon, and eaten the little sandwiches. Then the deceased sat up on the slab and asked what was for dessert.
The facts, as plain as a man can lay them on a Tuesday:
54% to 57% percent of the float is sold short. S3 rates the squeeze risk a hundred out of a hundred, which is the number they reserve for stocks that make grown men weep quietly into their Bloomberg terminals.
Pull out the Czech, the insiders, and the sleepy holders who paid $11.30 in the last rights offering and went home to enjoy a cup of coffee, and the *true* tradeable float is about 19 million shares. The shorts are sitting on 16 or 17 of them. That is 85% of the dog, in the hands of people betting it will not bark.
Meanwhile the company has a $245 million buyback authorization gathering cobwebs in the safe — a check pre-written for more shares than exist to be purchased, on a market cap south of half a billion.
In the corner, like a forgotten umbrella, sits a 1.79% stake in SumUp — a European payments house the whisperers have at $10 billion. If they file, the umbrella is suddenly worth $179 million, and Groupon does not have to lift a pinky. The market will come over and reprice it, gratis, out of good manners.
The CEO, a Czech gentleman named Senkypl, paid $11.30 of his own coin for 3.1 million shares seventeen months ago, and carries PSU strikes that top out at $82. A man does not set his own watch to $82 if he's planning to sell the factory at $9.
Goldman is at SELL, ten-dollar target. Goldman is not *wrong*, exactly. Goldman is paid to be right at the pace of Goldman, which is the pace of institutional caution, which is the pace at which glaciers used to move before the climate got involved. I wish Goldman well.
A few observations, offered freely:
*It has been my experience that a short seller is a man who has confused the long run with the short run, and will be introduced to the difference on a Tuesday he did not put on his calendar.*
*A stock that has been pronounced dead five years running and grows revenue in the sixth has not necessarily been resurrected. But it has, at minimum, stopped cooperating with the coroner.*
*North American local billings went +11, +20, +18, +9 on the year. That is not a melting ice cube. That is an ice cube doing calisthenics.*
*A buyback authorization larger than the float is not a plan. It is a loaded question.*
None of this is advice. I am one more fool on the internet with a keyboard and a theory. Options go to zero, and so, occasionally, do the people who buy them without stops. But if you've been waiting for the tableau where the shorts are chained to the radiator, the operator has paid up for his own stock, there is a free call option on a payments IPO lying in the corner, and the tape still trades the name like it's 2019 and Andrew Mason is about to drop a concept album — this is, roughly, that tableau.
Bring a seatbelt. Bring it soon. The shorts are paid to be right in the long run. They do not, alas, get to choose which Tuesday the long run shows up.
— Position: long shares, some May calls. Not your buddy, not your advisor, not your priest.