Analyst Note| Ali Mogharabi |
Groupon posted better-than-expected fourth-quarter results, an early indication that the firm’s growth plan and restructuring are bearing fruit. Expanding inventory and no longer enforcing deal restrictions, plus making improvements on the customer and merchant side drove some recovery in bookings, although the additional lockdowns and restrictions in late fourth quarter decelerated the recovery a bit. The firm remains confident that growth will return this year as shown by its full-year revenue guidance that is above our projection and the FactSet consensus estimates. We plan to slightly increase our projections, which could lead to a modestly higher fair value estimate versus our current $48. While the no-moat and very high uncertainty stock went up 17% in reaction to the results, it continues to trade at a discount to our fair value estimate.