GRPN stock is up 3% today after Groupon (NASDAQ:GRPN) announced it was expanding its partnership with fitness, beauty, and wellness network Mindbody.
Services Strategy Boosting GRPN Stock
The expanded partnership is the next step in Groupon’s strategy of integrating its service into daily local commerce. Mindbody is a cloud-services platform specifically targetted at the wellness industry, where local businesses use its software and payments platform to run and market their operations. Consumers use Mindbody to find, engage, and transact with fitness, beauty, and wellness providers in their local communities. GRPN stock is trading up at $2.97, following the news.
“Through an expanded partnership with Mindbody, we’re excited to significantly increase the ability of our users to discover and book more choices in one of our largest and most important categories,” said Tim Eby, VP of health, beauty, and wellness at Groupon. “This is the latest way that we’re transforming Groupon into more of a daily utility for customers and making our marketplace more bookable and voucherless.” The announcement has helped sustain GRPN stock’s recent rally, after dropping nearly 35% in early August.
GRPN stock took a hit in September amid reports the company was considering an acquisition of Yelp (NYSE:YELP). Forbes recently described the deal as a bad idea, arguing that it expects the deal to cost Groupon in excess of $3.5 billion USD, more than twice its current market cap of $1.6 billion USD. Groupon’s most recent results showed that the company had about $600 million USD in cash and $208 million USD in debt, meaning any takeover would have to be financed externally.
It was those earnings that led to the biggest drop off in GRPN stock this year, with revenue of $532.6 million USD missing the consensus estimate of $552 million USD. Elsewhere, gross profit dropped by nearly 10% to $292 million USD as the company shifts its focus from goods deals towards the services market. Based on today’s trading, that strategy appears to be yielding results.
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