By Sam Boughedda
Investing.com — Shares of Groupon Inc (NASDAQ:GRPN) are down more than 16% Wednesday after the company revealed a 2.4% stake in payments service provider SumUp.
The stake may not seem like such a bad thing. However, Groupon's share price previously rose significantly due to its stake in the firm, which investment research firm Prescience Point Capital said was in the "mid-single digits."
Prescience released a note on Groupon Monday, stating they saw a potential 225% upside in the company's stock price based on their view of its SumUp stake. In its note, Prescience urged Groupon to disclose its stake in SumUp.
Groupon has answered that call. Under the question "What companies do Groupon and its subsidiaries currently hold investments in?" on its FAQ page, the e-commerce marketplace company answers that it "holds a 2.4% non-controlling ownership interest in SumUp Holdings," lower than the mid-single digits Prescience had estimated.
Nevertheless, while the stake is lower than Prescience initially thought, the investment research firm still has confidence in its Groupon thesis, stating it "believes that Groupon's public disclosure of its stake in SumUp coupled with the recent news about SumUp's proposed funding round confirms that the investment has tremendous value."
"With any lingering conjecture put to rest, investors may now shift their focus towards a series of imminent positive catalysts that will drive Groupon shares significantly higher in short order," Prescience added.
The firm believes Groupon's SumUp investment is worth $15 per share and their base case price target for Groupon is now $69.92, with a bull case price target at $99.32.