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Cramer: Gains in Groupon, Yelp for Real?

Looking at the trend, Cramer sees things he likes.

On the positive side, “Core business metrics, such as more couponing for Groupon, and more reviews for Yelp, are definitely headed in the right direction,” he said. It appears both companies have leveraged aggressive growth strategies.

But – considering the gains already — improved metrics don’t necessarily mean their respective stocks have more upside from here.

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“Groupon cash flow was negative this quarter,” Cramer said. “Although I can see why people might be willing to pay high single digits for the company (as a bet on the promise of new media), I remain somewhat skeptical because, in the end, the bottom line matters most and Groupon still isn’t making money.”

As for Yelp, Cramer said, “it has become, overnight, one of the most overpriced stocks in the book. Although it could breakout to remarkable profitability rather quickly, I think the nearly $2 billion market cap is already fair value.”

All told, Cramer thinks these stocks are worth watching but not buying – at least not at current levels.

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Mystic Maggie

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