Groupon Can Locate More Business With Glassmap Acquisition
Groupon (NASDAQ:GRPN) has acquired Glassmap, makers of a real-time location sharing application for smartphones, for an undisclosed sum. Using Glassmap’s technology, users can share their real-time location with friends. The application is integrated deals with popular social networking sites such as Facebook that provides a powerful tool to advertisers, to target users based on location. This acquisition is likely to be a part of Groupon’s real-time deal application Groupon Now!, which provides location based real-time deals.
The customer demographic for Groupon is slowly shifting towards mobile devices. The company has a much larger subscriber base and has surpassed the 200 million subscriber mark while featuring more than 100,000 unique merchants. The company is experiencing significant mobile traffic and reported that a third of its North American business was via mobile devices. [1] This shift to mobile devices is the main reason for the Glassmap acquisition.
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Location-Based Services Market Booming
Location-based advertising and services such as deals in restaurants, are a booming market poised to grow to about $10 billion by 2015, according to Pyramid Research. [2] Leading location-based services are Groupon Now!, and Foursquare, they help find location-based deals as well as enable sharing it with other similar application users. This service is particularly popular with restaurants, coffee shops and bars, who try to bring in crowds during off-peak hours by providing discounts.
Groupon Now! contributes to less than 1% of Groupon’s business currently as per our estimates, but with nearly a third of its business now originating from mobile devices, this will become a significant revenue driver in the near term. Our estimate accounts for only Groupon sold via the Now! application and does not factor in features such as advertising revenues and revenue from Groupon Payments, which is likely to feature in the future.
We currently have a $4 Trefis price estimate for Groupon, which stands 20% below its current market price.
Understand How a Company’s Products Impact its Stock Price at Trefis
Notes:- Groupon SEC Filings, www.sec.gov, Nov 8, 2012 [↩]
- Location-Based Services To Hit $10.3 billion by 2015, www.bostinno.com [↩]