Bulk of its Revenues Coming from Outside the U.S. Makes Groupon a Gamble, According to Profit Confidential

According to George Leong, contributor to Profit Confidential, Internet-related stocks are not an easy place to make money. The latest casualty of the downward spiral in Internet stocks is Groupon, Inc., which according to its second-quarter earnings reports, cratered over 20.0% to a record low at below $6.00 after a revenue shortfall of $7.0 million. Leong believes that because Groupon makes about 60.5% of its revenues from outside the U.S., and given the dismal situation in Europe, this makes the stock a risky investment opportunity.

In the article “Why Playing Groupon’s Akin to Betting,” Leong thinks that those looking for a high-risk investment opportunity may want to take a look at Groupon.

Leong says that he is not ready to write off Groupon, and he sees a potential investment opportunity here; however, he says, investors need to make this decision for themselves.

Leong thinks that the big risk that is now appearing is the inconsistency of revenues and the fact that there are numerous rivals emerging that offer or will pose a threat to Groupon’s business.

But Leong still sees a possible investment opportunity.

The Profit Confidential contributor does acknowledge that there are lawsuits that allege Groupon has not been truthful in its communications to investors.

“As such, the investment opportunity risk is high, especially if Groupon is found to have additional internal control issues,” he says.

Leong thinks that Groupon should only be viewed as a contrarian investment opportunity at this time.

“But the stock could surge if there aren’t any further surprises and if the company can fend off rivals,” concludes Leong.

Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market…before it plunged.

Profit Confidentialwas among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.

To see the full article and to learn more about Profit Confidential, visit www.profitconfidential.com.

Profit Confidentialis Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit www.profitconfidential.com.

Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.