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Groupon Inc GRPN

Rating as of

Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Groupon Progressing Toward Return to Growth and Margin Expansion

Ali Mogharabi Senior Equity Analyst

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.

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Company Profile

Business Description

Groupon acts as the middleman between consumers and merchants, offering a variety of products and services at discounts via its online store. It offers consumers daily deals (in the form of online vouchers) from local merchants. Groupon also sells products directly to consumers. It generates revenue from the take rate on the purchase and/or usage of the vouchers (40% of total revenue) and from direct sales (60% of total revenue). More than 65% of Groupon’s revenue comes from North America.

Contact
600 West Chicago Avenue, Suite 400
Chicago, IL, 60654
T +1 312 334-1579
Sector Communication Services
Industry Internet Content & Information
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Distressed
Employees 4,159

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