Groupon Shares Decline 25.2% YTD: Should You Buy the Dip Right Now?

Core Viewpoint - Groupon, Inc. (GRPN) has experienced a significant stock decline of 25.2% year to date, contrasting with the growth of the Zacks Internet Commerce industry at 22.9% and the broader retail sector at 19.4% [1] Financial Performance - For 2024, Groupon anticipates revenues between $495 million and $515 million, reflecting a year-over-year change of (4%) to 0% [3] - The Zacks Consensus Estimates for 2024 revenues is set at $514.51 million, indicating a slight decline of 0.1% year-over-year [3] Market Position - Groupon operates in a highly competitive environment, facing competition from companies like Yelp, Rakuten, Travelzoo, and Wowcher [3] - The company has a solid marketplace momentum and strength in its e-commerce business model, which are positive indicators for long-term prospects [3] E-commerce Strategies - Groupon's e-commerce platform allows users to access numerous deals anytime and anywhere, enhancing customer convenience [4] - The company is focused on building a trusted marketplace by fostering long-term relationships with local merchants to improve inventory selection [5] Local Segment Growth - The Local segment, which is crucial for Groupon's e-commerce business, generated $114.1 million in revenues in Q2 2024, accounting for 92% of total revenues, with North America Local revenues growing 7.3% year-over-year [6] - Groupon is enhancing its deal quality by removing lower-quality offers and improving deal presentation [6] New Initiatives - The company is seeing solid demand for family-friendly activities and has launched a new initiative called Flash Sale, which has shown promising performance [7] - Groupon's AI integration is improving deal copywriting and recommendation processes, contributing to growth in enterprise accounts [8] Earnings Outlook - The Zacks Consensus Estimate for 2024 earnings is 47 cents per share, a significant upward revision of 56.7% over the past 60 days, compared to a loss of 52 cents in 2023 [9] Valuation - Groupon is currently trading at a forward Price/Sales ratio of 0.7X, significantly lower than the industry average of 1.72X, presenting an attractive investment opportunity [11] Conclusion - Despite facing near-term challenges, Groupon's strong marketplace, robust e-commerce model, and growing merchant base present a solid investment opportunity for growth-seeking investors [13]