Analyst Note| Ali Mogharabi |
Groupon reported mixed third-quarter results, with revenue coming in slightly below our projections and the FactSet consensus estimates. The firm’s successful cost-restructuring plan helped the bottom-line numbers beat expectations. The third quarter reflected the impact of the pandemic as goods sales declined in both the North American and international markets. However, the firm has committed to returning to growth with an aggressive expansion strategy in test markets, in addition to launching experimental products and deal offerings. Despite the pandemic-induced drop in consumer demand for deals, we are pleased with management’s efforts to improve purchase frequency and billings growth, and we expect the firm to recover after the coronavirus pandemic. We are maintaining our $48 fair value estimate, and the stock continues to trade at a significant discount.