Groupon, Inc. (NASDAQ: GRPN) has seen its stock decline 25.2% year to date (YTD) against the Zacks Internet-Commerce industry's growth of 22.9%, the broader retail sector's return of 19.4% and the S&P 500 index's rally of 20%.
GRPN, which has emerged as a two-sided global marketplace company, has been suffering from its weakening momentum in the international market. Unexpected site stability issues related to its cloud migration project have also been heavily affecting the company's performance.
Groupon's business model makes it heavily dependent on daily deals, which is a major headwind. Since most of the offerings are consumer discretionary products, demand is heavily dependent on macroeconomic conditions. Given this, the ongoing market uncertainties, persistent inflation, looming recessionary fears, changing consumer demand and spending patterns are dampening the company's near-term prospects.
Year-to-Date Price Performance
Image Source: Zacks Investment Research
GRPN's bearish guidance is a negative. For 2024, the company expects revenues between $495 million and $515 million, indicating a year-over-year change between (4%) and 0%. The Zacks Consensus Estimates for 2024 revenues is pegged at $514.51 million, implying a year-over-year decline of 0.1%.
The company operates in a highly competitive market, wherein it faces significant competition from the likes of Yelp (NYSE: YELP), Rakuten, Travelzoo (NASDAQ: TZOO) and Wowcher.
Groupon's solid momentum in its marketplace platform and strength in its e-commerce business model are major positives. Its large-scale global operations and growing relationship with third-party merchants reflect the company's upside potential, which bodes well for its long-term prospects.
Given the YTD dip in GRPN shares, investors are questioning whether this is the right time to buy the stock. ...
