Groupon Likely to Operate the Same Under New CEO but May Be Seeking a Buyer

Groupon GRPN management continues to play musical chairs. Kedar Deshpande has stepped down as CEO, and the board has appointed Dusan Senkypl as interim CEO. Deshpande will no longer be on the board but will act as an advisor during the transition. Senkypl, who joined Groupon’s board last year, is the co-founder and CEO of Pale Fire Capital, which is Groupon’s largest shareholder with a 22% stake. The move may create a bit more urgency in turning the company around; it could also indicate that the firm is seeking a buyer. Pale Fire has a private equity side, so this move could also be in preparation to sell Groupon’s stake in SumUp, which is valued at around $6 per share (our estimate based on SumUp’s last funding round per PitchBook), much higher than Groupon’s current stock price, and then take the firm private.

From an operational standpoint, our expectations for Groupon have not changed with Senkypl at the helm. The firm’s main issue has been execution under three different CEOs over the last three years with no improvement, as users and merchants on the platform have continued to decline. The additional cost-cutting measures that the firm announced earlier this year further lessen the chance of establishing a network effect.

We have not made any adjustments to our model and still expect some stabilization in users and monetization in 2025. Our fair value estimate remains $19 per share, assuming the firm will not be sold. We do not plan to change our Poor Capital Allocation Rating.

Senkypl will be focusing only on Groupon’s day-to-day operations. Pale Fire has around $1 billion in assets under management and consists of a global macro hedge fund and technology-focused private equity.