Groupon’s Struggles Persist Amidst Market Growth
Groupon (GRPN) shares have fallen 25.7% year-to-date (YTD), lagging behind the Zacks Retail-Wholesale sector’s increase of 28.8%.
Additionally, it has not matched the performance of the Zacks Internet – Commerce industry or its competitors such as Booking Holdings (BKNG), Amazon (AMZN), and Travelzoo (TZOO).
In the same period, shares of TZOO, BKNG, and AMZN rose by 105.4%, 47.3%, and 38.6%, respectively. The industry as a whole jumped 33.5% YTD.
The company’s struggles are primarily due to decreased North America revenues, driven by rising local voucher redemption rates, and a drop in international sales after exiting the Italian market. For the third quarter of 2024, North America revenues of $86.9 million fell 9% year-over-year, while International revenues of $27.6 million decreased by 13% during the same period.
Groupon’s Price Forecast and Market Sentiment
Groupon, Inc. price-consensus-chart | Groupon, Inc. Quote
Conversely, the growth in Consolidated Travel revenues offers some hope for investors. Consolidated Travel revenues reached $4.3 million, marking a 3.4% year-over-year increase.
Shifts in Strategy and Future Prospects
Groupon is evolving from a deals-centric company to a marketplace-driven model. This transformation has facilitated new features aimed at enhancing local experiences and diversifying its global presence.
By focusing on feature development and a user-friendly platform, Groupon plans to improve customer engagement and satisfaction.
Recent enhancements, such as AI-driven FAQs and tailored merchant pages, have strengthened customer interaction and retention, optimizing targeting strategies. Moreover, the addition of multiple languages broadens its market accessibility.
Innovative video content on merchant pages is boosting customer traffic, enabling GRPN to deliver fitting product offerings effectively.
Groupon’s new Platform for Performance aims to ensure a quicker and more reliable customer interaction.
Expanding partnerships with various brands signals potential growth, a positive sign for stakeholders.
Short-Term Outlook Appears Challenging
Looking ahead, Groupon estimates revenues for the fourth quarter of 2024 will range between $124 million and $131 million, indicating a year-over-year decline of 5-10%.
Adjusted EBITDA is projected at between $14 million and $19 million, with an anticipated positive free cash flow.
The Zacks Consensus Estimate for fourth-quarter 2024 earnings sits at 6 cents per share, down from 10 cents in the past 30 days, indicating an 80% year-over-year drop.
The consensus for fourth-quarter 2024 revenues is $129.17 million, reflecting a 6.21% year-over-year decrease.
Groupon has beaten the Zacks Consensus Estimate in three of the last four quarters, with an impressive average surprise of 159.52%.
Check out the latest EPS estimates and surprises on Zacks Earnings Calendar.
For the full year 2024, Groupon expects revenues between $486 million and $493 million, which translates to a year-over-year change of -6% to -4%.
Adjusted EBITDA for the year is likely to be between $65 million and $70 million, with expected positive free cash flow.
The consensus forecast for 2024 loss per share is estimated at 29 cents, improving from a loss of 52 cents per share in the previous year.
The Zacks Consensus Estimate for 2024 revenues stands at $491.35 million, marking a decline of 4.58% from the previous year.
Valuation Concerns Loom for Investors
Currently, GRPN shares are trading at a premium, reflected by a Value Score of C.
The forward 12-month Price/Earnings (P/E) ratio for GRPN is at 58.8X, significantly higher than the Zacks Retail-Wholesale sector’s average of 25.06X.
Nonetheless, Groupon’s ongoing expansion of its product range and market operations is encouraging.
Presently, GRPN holds a Zacks Rank #3 (Hold), suggesting that investors may want to wait for a more favorable entry point for shares.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Access Exclusive Insights for Just $1
We’re serious.
Years ago, we surprised our subscribers by offering them 30-day access to all our stock picks for only $1, with no further obligations.
Thousands have seized this opportunity, while others hesitated, thinking it too good to be true. Indeed, our intention is to familiarize you with our portfolio services, including Surprise Trader, Stocks Under $10, Technology Innovators, and highly successful recommendations that brought numerous double- and triple-digit gains in 2023 alone.
Want to receive the latest recommendations from Zacks Investment Research? Today, you can download our report: 5 Stocks Set to Double. Click to get this free report.
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
Groupon, Inc. (GRPN): Free Stock Analysis Report
Travelzoo (TZOO): Free Stock Analysis Report
Booking Holdings Inc. (BKNG): Free Stock Analysis Report
To read this article on Zacks.com, click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
