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GRPN($24。

25)

-reportQ4tonightaftertheclose。

-optionsmarketisimplyingabouta14。

5%move(withstockat$24。

00taketheFeb10weekly24straddleofferedat3。

50anddividebythestockprice,thatwillgiveyouyourbreak-evensonFridaysclose)。

-WallStreetanalystsareobviouslyfairlymixedonthenamewith7Buys,12Holdsand4SellsandShortInterestisthroughtheroofatalittleabove40%ofthefloat。

-Stockisup16%ytd,outpacingtheNasdaqwhichisupalmost12%,butmostofthesegainshavecomesinceFacebooksfilingoftheirS1fortheirimpendingipo?

Facebooks?

valuation?

hashelpedsentimentinnameslikeGRPNandZNGA,butoncethehangoverpasses,thesecompanieswillhavetostandupontheirownmerits。

CitibankAnalaytsMarkMahaneywhohasaNeutraland12monthpricetargetof$24hadthefollowingtosayinhisquarterlypreviewnote:

Wearelookingfor$1。

31BinGross?

Billings,$479MMinNetRevenue,$31MMinCSOI,and$0。

05inProFormaEPS?

Basedonourmodelsensitivitywork,intra-quarterdatapoints,andchannelchecks,we?

viewourQ4estimatesasreasonable。

ChangingFXtrends(International=66%of?

GRPNGrossBillings)willlikelyreducepotentialupsidetoourestimates,butwedon’t?

seeevidencethattheywillcausematerialdownsidetoourestimates。

OurGRPNfundamentalscallforQ4isMixed–WeareexpectingY/Yreported?

GrossBillingsNetRevenuegrowthtodeceleratesequentially(fromabout400%+?

Y/YgrowthreportedinQ3:11toroughly200%Y/YgrowthestimatedinQ4)–still?

growingatanimpressiverate。

Ourfundamentalscallisalsobasedonourestimatefor?

amaterialCSOImarginexpansion(fromCSOIlossesinQ4:10andQ3:11to2。

3%

marginestimatedinQ4:11),primarilyduetoleveragethruSGAandMarketing。

Webelieve?

materialupsidevaluationfromhere(GRPNiscurrently@42X’12EBITDA)requires

successinnewsegments(GrouponNow,GrouponRewards,Getaways,Live,Goods?

etc…)thatwebelievecouldtakesignificanttimetoproveout。

And,atthistime,we?

believeGRPN’sinvestmentpositivesandrisksarefairlybalanced

MYVIEW:thisisnotthesortofstockthatIwouldwanttoown,notbecausethevaluationisridiculous(tradingat12xtrailing12monthsales),butbecauseIthinkthereisaverydistinctpossibilitythatthehypesurroundingthecompanywillquicklyturnto?

frustrationannoyancebybothconsumersandvendors?

Whiletheseguyshaveamassivefirstmoveradvantage,Iamnotsurethebarrierstoentrybycompanieswithestablishedwebpresencesisthathigh?

TobeveryfairIdonothaveanyparticularinsightintotheirbusiness,butIknowthatitisnotthesortofthingthatIwoulduseandgenerallyfromwhatIhaveheardfromusersisthatthereisastrongpossibilitythattheirbestdealsarebehindthem?

AsfaraswhatIhavereadaboutsomelocalvendors,ithastheabilitytoblowyoursmallbusinessup,sometimesinaverygoodwaybutoftenintheexactwrongway。

Iobviouslyhavenoclue?

whatthecompanywillreportorguideto,butitbetterbegoodgiventhestocksrecentrun。

Buyingthemoveseemslikean?

awful?

hardwaytomakemoney,andinsomewaysIcouldseethestockunder-performing?

themoveasanyweaknessmaybemetbybuyerslookingtoplayforarunintoFacebooksIPObonanzaexpectedinthespring。

Iguessthereare2tradesthatIwouldconsiderthatworkedoverthelastcoupleweeksinnamesLikeNFLXandGMCR,bothwithhighshortinterest(likeGRPN)?

acallcalendar。

Therecouldbe2reasonstodothis。

One,youthinkthereisachanceyougetaspikehigherfollowingtheprinttoabouttheimpliedmove,atwhichpointyoucouldmakethe?

difference?

betweenthelongerdatedcallthatyouownandtheshortdatedoneyouareshort。

Or,itsaplayforamutedmovefollowingearningsbuthelpfinancethepurchaseofacallfurtheroutthatmaybenefitfroman?

internet?

frenzy?

intoFacebookipo。

Thesecondtradeisifyouthinkthemorethan200millionsharessettocomeunlockedonMay1stcouldserveasa?

significant?

overhangandyouwanttolooktofinancethepurchaseofAprilPuts。

TRADESTHATIWOULDCONSIDER?

TRADE1:GRPN($24。

30)Feb17th/April28CallSpreadfor。

80

-SellFeb28callat。

65

-BuyApr28callfor1。

45

Break-EvenonFebExp:

Maxriskis。

80

Ifthestockisbelow28onFebExpirationyoueffectivelyowntheApril28callfor。

80andthencanlooktoturnintoacallspreadtofurtherreduceyourrisk,orifyougetabigspikescalpthedifferencebtwnthe2options。

OR

TRADE2:GRPN($24。

30)Feb17th/April20PutSpreadfor1。

60

-SellFeb?

20putat。

60

-BuyApr20put?

for2。

20

Break-EvenonFeb17thExp:

Maxriskis1。

60

Ifthestockisabove20。

00Feb17th?

expiration?

youeffectivelyowntheApril20Putfor1。

60。