Selling for $3.12 USD at the time of writing, the Groupon penny stock is a far cry from its prime when it traded at over $20. Those were the good days, about six years ago, when Groupon (NASDAQ:GRPN) was the darling of the discount world.
It was new and trendy and offered users much-needed cheap treats in the midst of a hard recession.
Penny Stocks: Groupon
But we’re rich again now. Yes, there will always be a market for discounts (who doesn’t love a good bargain?) but unemployment levels in America and Europe are at the lowest levels they’ve been in years and, all-in-all, economies are booming again. With more disposable income available, has Groupon simply had its day?
The Numbers
Looking at the numbers, it’s clear that we are ‘over’ the Groupon model and I wonder if wealth has anything to do with it:
- The GRPN penny stock has plummeted 41.8% in 2018.
- Year-over-year revenue has now declined for 11 quarters in a row. (This is basically since 2015.)
- Groupon has fallen short of Wall Street’s revenue targets in each of the past two financial reports.
- The company recently warned that it won’t meet its earlier free cash flow goal of $200 million for 2018.
At $3.12 USD, Groupon itself… is now on sale.
Penny Stock Waning in Popularity
It’s clear that the Groupon model just isn’t as popular as it used to be. The company sold 11% fewer vouchers in Q3 than the year previous. That number was even scarier across North America—17%.
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However, one thing that is on the rise is gross profit per active customer. So if this penny stock can hold onto those loyal customers, it may see a resurgence. But to combat the ailing numbers those customers would need to be very loyal. Groupon can’t sustain its entire business on those who ‘swear by it.’ It needs to be building on its customer base and evolving.
And what is most needed is evolution. Groupon says it is already working on “strategic alternatives that include enhancing customer experience, unlocking international potential, improving operational efficiency, and establishing Groupon as a true platform.”
The voucher model is dated by now, and the company is combatting this by introducing card-linked offers instead. However, until it actually figures itself out, the GRPN penny stock doesn’t look like it will budge much higher.
Or else it could hold on tight until the next recession, when we’ll all be wanting haircuts for $10 again and 2 for 1’s at the steakhouse.
Featured Image: Depositphotos/© BrianAJackson
