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Social Media Stocks Could Continue to Outperform

David Becker
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Social media stocks could continue to outperform in 2014, as company’s like Groupon play catchup tothe rest of the group.

Groupon Inc., (NASDAQ:GRPN) operates as a local commerce marketplace that connects merchants to consumers by offering goods and services at a discount in North America and internationally.

The company recently announced two new solutions for last-minute shoppers: the Grouponvelope and the digital gift voucher. With these new options, Groupon lets local merchants who do not have a gift card program reach millions of customers looking for last-minute but thoughtful holiday gift ideas.

The 52-week range for the stock price is $ 4.24 – $12.76, and it hit a new fresh 52-week high in September. Sales increased 5% quarter over quarter and the 3-year growth rate of sales increased 123%. The profit margin for the company is 6.4% and the market capitalization is 7.75 billion dollars.

Recent insider purchased of the company should give investors’ confidence. Kal Raman purchased 250,000 shares on December 15, 2013 for a total value of 2.56 million. Jeffrey Holden and officer purchased 200,000 on the same date for the total value of 2 million. Jason Child purchased 195,000 shares for a total value of slightly less than 2 million.

The technical picture is shows a stock that is rallying and could continue to move higher testing resistance near the September highs at 12.75. Momentum on the stock is strong with the MACD (moving average convergence divergence) index printing in positive territory with an upward sloping trajectory. The RSI is printing above 70, which means that the move is overbought, and a correction could be coming soon. The 10-day moving average recently crossed above the 50-day moving average showing that a medium term trend is in place.

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