What happened
E-commerce stocks are on the move Monday, albeit in opposite directions. Shares of digital-coupon hawker Groupon (GRPN 10.02%) are down 3.3% in 2:30 p.m. EDT trading (after falling nearly 6% earlier in the day).
But shares of e-commerce facilitator Shopify (SHOP 4.90%) and online postage seller Stamps.com (STMP) are taking off in tandem -- up 7.5% and 6.5% respectively.
Image source: Getty Images.
So what
The rises in both Shopify stock and in Stamps.com shares can be traced directly back to just one event: A tweet from Citron Research this morning in which the noted short-seller took a turn for the optimistic, predicting a buyout of Stamps.com by Shopify.
ECOM ON FIRE. Citron believes $STMP gets acquired by $SHOP. Valuation gap has never been larger. On NTM EV/Sales, $SHOP at 44x vs. $STMP at 6x and $STMP is the proven leader in online postage... the essential tool for small biz not owned by $SHOP. All stock deal could be $400
— Citron Research (@CitronResearch) July 20, 2020
It should be noted that Citron gives no source for its belief that Shopify will buy Stamps.com -- just the observation that the two businesses appear well suited to go together, while the two stocks are very far apart in valuation. And they are. Shopify currently sells for 10,000 times forward earnings, while Stamps.com costs 31 times forward earnings. Price-to-sales valuations are similarly widely disparate -- 64 times sales for Shopify versus 6.6 times sales for Stamps.com.
Now what
Citron's argument has merit. In the event that Shopify agrees with the analyst that it's "essential" for it to acquire an online postage company, well, its richly valued shares should go a long way toward paying for Stamps.com's much cheaper shares. Then again, Shopify has done just fine without owning an online postage subsidiary for the last 16 straight years, growing into a $1.7 billion-a-year tech business.
As logical as Citron's argument might sound, as far as I know there's no reason to believe that Shopify will act on it.
Now, what about Groupon? I haven't said much about Groupon and its falling stock price, because honestly, there doesn't seem to be anything behind it. There's been no bad news out of the company today, nor any negative analyst coverage either.
My best guess as to why Groupon's falling? Earnings are due out in just a little over a week, and analysts are forecasting a pretty astounding loss for the quarter: $2.75 per share, versus the $0.20 per share profit Groupon managed a year ago. It could be that investors today are just getting out early to beat the rush if earnings turn out to be as miserable as expected.
Groupon reports on July 28.
