Shares of Groupon (GRPN -1.09%) were soaring today, up 15.5% as of 1:50 p.m. EDT. While there didn't seem to be any company-specific news to account for the rise, the first new trading day of the year is often one of reassessment and rebalancing. Groupon is down 34% over the past 12 months, so investors might now be rotating toward beaten-down stocks.
But perhaps most importantly, optimism over diminishing economic effects of the coronavirus omicron variant appears to be a big factor as well.
Over the weekend and this morning, the former Food and Drug Administration commissioner, Dr. Scott Gottlieb, indicated on Twitter and on television that the omicron variant's surge in the northeastern U.S. may be peaking, and that we could be past omicron within a month.
That was likely music to the ears of Groupon shareholders, because the company specializes in deals for local experiences like restaurant meals, spa treatments, and other out-of-home events. Omicron likely threatened the company's recovery from its COVID-19 slump, so to have some testimony backing up a waning omicron effect was a huge plus.
Despite today's surge, Groupon is still very much a turnaround story. The company just appointed a new CEO in December, Kedar Deshpande, who was formerly the CEO of Zappos. Prior management also just completed a $225 million cost-savings plan as part of a restructuring during the pandemic. Although the company has been slowly growing active local customers over the past couple quarters, total customers remain below pre-pandemic levels as purchases of travel and goods remain depressed.
Still, Groupon's reopening prospects remain intriguing, and the stock only trades around 10.5 times 2022 earnings estimates. So for deep-value investors looking for cheap fixer-uppers, Groupon may be an interesting 2022 pick with a new CEO at the helm -- especially if omicron begins to wane.