You Should Move On From Groupon

Groupon 3 anos

photo credit: GRPN_BR

Groupon Inc. (GRPN) is set to report this Friday, August 3rd and things are not looking so good for the coupon/voucher services company. Earnings per share (EPS) is projected to increase… by a whopping 1¢ from the previous quarter (Q1 2018). In terms of year over year (YoY%) that is technically a 100% increase. However, going from $0.02 (Q2 2017) to $0.04 (proj. Q2 2018) in a year is not a strong indicator of growth.

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Furthermore, revenue is projected to decrease 4% YoY. This is a worrying sign, even as revenue is projected to increase this quarter (Q2 2018) over the last quarter (Q1 2018) by $8.59 million. The true performance indicator of Groupon lies with its yearly growth—or lack thereof.

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Groupon also just lost an $83 million lawsuit with IBM in which Groupon was accused “of building its online coupon business on the back of the IBM e-commerce inventions without permission.” (1) Groupon’s loss in this lawsuit is not only a troubling indicator of Groupon’s poor judgment, but also it is sure to lower the stock price as confidence in the company and its (questionable) practices may decrease.

Furthermore, Groupon’s acquisition rate of North American Active Customers is projected to grow only by 3% (YoY). This increase is much smaller when compared to the same quarter last year (Q2 2017), when Groupon’s North American Active Customers increased by 14%. Compared to Q2 2017, the decreased rate of growth this quarter is a strong indicator of one of Groupon’s weaknesses in the market itself. It demonstrates a lack of active customer development from year to year. Groupon needs to find a way to appeal to more e-shoppers (and maintain its integrity) if it hopes to be financially viable in the future.   

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1:Yasiejko, Christopher. “IBM Wins $83 Million from Groupon in e-Commerce Patent Fight.” Chicagotribune.com, 30 July 2018, www.chicagotribune.com/business/ct-biz-ibm-groupon-ecommerce-patent-suit-20180730-story.html.

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Disclosure: There can be no assurance that the information we considered is accurate or complete, nor can there be any assurance that our assumptions are correct.

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