Groupon's Better-Than-Expected Q3 Results Display a Turnaround Near Completion; Stock Undervalued

We are maintaining our $53 fair value estimate of no-moat and very high uncertainty rated Groupon. The firm’s third-quarter revenue and adjusted EBITDA came in ahead of the FactSet consensus estimates. While a decline in goods revenue again pressured top-line growth, demand for local and travel services continued to increase, which improved gross profit generated per active customer, albeit with a continuing decline in the active customer count. We remain confident that the firm’s consumer app and merchant self-service dashboard enhancements, plus higher inventory and continuing macroeconomic recovery will stabilize the active customer count and drive further growth in gross billings and revenue of local and travel in 2022 and beyond.