**$GRPN (\~680MM US market cap)**
Alright glue sniffers, I know you'd rather be buying 0DTEs on things you can't spell, but stay with me here and you might actually make a buck or two.
**tldr** for those of you with the attention span of a gnat: Groupon has a $245M buyback authorized against a real tradeable float of \~19M shares, a 1.79% stake in a $10B private payments company that's carried on the books at nothing, a CEO who dropped $35M of his own money buying shares at $11.30, a short book sitting on roughly 85% of the real float, and a business that just grew revenue for the first time since 2018. Market cap is under $700M.
**Full thesis:**
**The Czechs don't screw around**
A Prague PE shop called Pale Fire Capital took a large stake in 2022 and installed their guy Dusan Senkypl as CEO in 2023. Senkypl isn't a founder LARPer in a Patagonia vest, he's spent fifteen years buying unloved Central European internet businesses and actually making them work. Since he took over, the company cut costs, killed the distractions, and refocused on North American local deals. He also bought 3.1M shares at $11.30 with his own money, which is about $35M of personal capital at a price more than double where the stock trades today. His PSU strikes run up to $82. You don't write your own comp that way if you're planning to sell the building for parts.
**The business stopped dying**
North American local billings grew +11%, +20%, +18%, and +9% over the last four quarters. Total revenue grew year-over-year in 2024 for the first time since 2018. Adjusted EBITDA was positive, free cash flow was positive. Everyone's been pricing this as a melting ice cube for a decade, and the ice cube stopped melting, but nobody updated their model.
**The SumUp stake is a free call option**
Groupon owns 1.79% of SumUp, a European Stripe/Square competitor. SumUp raised at \~$8B in 2022, and recent reporting puts the private valuation near $10B, with an IPO reportedly on the table. 1.79% of $10B is $179M. Groupon's entire market cap is under $500M, and the stake sits on the balance sheet at basically nothing, because private stakes don't get remarked until there's a liquidity event. If SumUp files, Groupon's equity gets repriced automatically, and management doesn't have to do anything. The market is pricing this at zero.
**The buyback is bigger than the float**
Strip out Senkypl's stake, Pale Fire's stake, and the holders who bought the $11.30 rights offering and went back to sleep, and the real tradeable float is around 19M shares. The $245M buyback, at current prices, is authorized for more shares than actually trade. They've barely used it. Boards don't sign authorizations bigger than the float unless they plan to use them, or at minimum want to credibly threaten to.
**Crowded shorts against that float**
Short interest is 54-57% of reported float, and S3 rates squeeze risk at 100 out of 100. Reported float isn't real float, though. If the true tradeable float is 19M and shorts are 16-17M, then the short book is effectively holding 85% of the stock that actually trades. I'm not in this as a pure squeeze play, but when sentiment on a setup like this turns, it turns fast, because the sellers on the way up are also covering.
**What this is worth**
Goldman has a SELL with a $10 target, which is a fine call if Groupon relapses. It won't. Between the buyback, the SumUp mark, the insider alignment, the business inflection, and the short book, I think the stock re-rates hard before Goldman gets around to upgrading it. Double or triple over the next twelve months is the scenario I'm playing for.
**Risks**
Calls go to zero, the business could re-deteriorate, SumUp may not file this year, the buyback could sit idle, and shorts can stay short longer than you can stay solvent. Size accordingly, or don't, I couldn't care less.
**Position**
I'm long shares and $20k worth of May calls. Not advice, not financial guidance, not your therapist.
https://preview.redd.it/taz98qjsjmwg1.jpg?width=1170&format=pjpg&auto=webp&s=c7a1c8895d30f602274836b5645e2382a06edb9e