Over the past six weeks, Groupon Inc’s (NASDAQ: GRPN) stock has gained 35%, but the stock has corrected around 20% from its recent peak.
The recent dip was related to a financing transaction, viewed by investors in a less than positive way despite some positives. The company announced $200 million worth of senior convertible notes due 2026 to institutional investors in a private placement on March 22, 2021. Interestingly, investors have an option of increasing this by $30 million. Proceeds will go into repaying debt due 2022. This is a good move for the company’s balance sheet as it pushes an upcoming maturity.
Last year an impairment charge left the company with a $10 per share loss. For shareholders, the concern is the convertible note could result in shareholder dilution if the notes will be converted to stock. The business which connects retailers and restaurants to consumers was impacted by COVID-19, leading to a decline. Therefore buying time to turn fortunes around is a better call, and for long-term investors, this is a stock to watch going forward.
Writing for business and finance publishers has become his passion over the last decades after he completed a master’s degree in Financial Management. Sharing some opinions and forecasts to thousands of readers is a routine job for him but he never promises to invest in one stock.