Across 2018, Groupon stock was poised to bring the next major bull run in the small-cap market. The reason was two-fold: Analysts predicted that Groupon (NASDAQ:GRPN) could make the perfect acquisition target, and improving operational margins meant that shares were afforded more value long-term.
However, there was always one problem standing in the way of that potential: declining revenue for twelve quarters straight. A result of which meant shares have shown limited upswing across 2018 and 2019.
Now, on the eve of the company’s anticipated earnings result, will Groupon deliver any surprises? Or will 12 quarters simply turn into 13?
Groupon Stock Earnings Results
The company is expected to release its quarterly earnings report later today. At the time of writing, shares are declining (down 2.22% on the NASDAQ), suggesting investors are preparing for the worst.
Further, the company has been downgraded by several analysts and now has an average consensus rating of “hold”. It has an average price target of $4.56 USD according to FinanceDaily.
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The company’s latest quarterly performance showed metrics including EPS of $0.08 and revenue of $799.93 million—down 8.4% y-o-y.
Things aren’t looking too promising for Groupon stock thus far.
Declining Revenue Meets No Buyer
It’s probable that the declining revenue is also why there have been no acquisition offers. According to Investorplace:
“An acquisition of GRPN could make some sense, but where are the buyers? Why, exactly, would anyone pull the trigger in 2019 or 2020 when the opportunity has been present for some time?”
Groupon Stock Business Model
With sales continually declining and no acquisition on the horizon, it could be argued that the company’s business model is a dying one. “Consumers like discounts, but the quality of merchants on Groupon simply isn’t good enough to keep driving growth.”
Groupon operates an online marketplace that connects merchants with consumers by offering discounted services and goods. The company offers deals across all areas from food, to entertainment, to beauty and packaged goods.
What will the earnings results bring? Can we expect a change of fortune for Groupon stock?
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Featured Image: DepositPhotos © SergeyNivens
