Groupon’s investment in SumUp could be worth more than Groupon – The Average Joe
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    Groupon’s investment in SumUp could be worth more than Groupon

    victorlei

    February 2, 2022

    groupon

    Groupon (NASDAQ:GRPN), the deals platform, is in quite a peculiar situation. Its ~5% ownership in a startup, SumUp, could be more valuable than the entire company itself…

    What’s the big deal? Groupon has struggled since going public in 2011 — with sales consistently declining and its stock down 94%.

    • Groupon reportedly owns a 5% stake in SumUp — currently worth nearly half of Groupon’s value — according to Prescience Point Capital.
    • SumUp is considering a new investment that would value it at $22.6B — meaning Groupon’s investment in SumUp would be worth more than Groupon.

    Since the news, Groupon is up 35% — with Prescience expecting more to come. But to understand Groupon as an investment, one needs to understand SumUp…

    Who is SumUp? In 2013, Groupon invested in SumUp — a payments processing company — similar to Stripe, PayPal, Block (Square).

    • SumUp — which offers contactless payment and debit/credit card readers — benefited from COVID.
    • 9 years later — SumUp has become one of the most valuable UK startups.

    Per Prescience, Groupon hasn’t publicly disclosed its exact SumUp ownership — only that its ownership is in the “mid-single digits”.

    Big target: Prescience raised their price target to $88, seeing the following as catalysts:

    • Prescience believes Groupon will soon confirm its ownership — possibly during its Feb 16 earnings call.
    • If SumUp successfully raises funds and a higher valuation, Groupon’s stock could go up.

    They also believe analysts haven’t incorporated SumUp’s value into Groupon — who would then have to raise targets on Groupon. At this point, an investment in Groupon isn’t a bet on a struggling deals business — but a bet on SumUp and the payments industry.

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