Groupon’s (NASDAQ:GRPN) stock is down about 54% year-to-date. Further, it has lost about 75% of its value in one year. The online marketplace that connects consumers and merchants through marketing campaigns to offer local experiences and services is struggling to drive revenues. Moreover, its recent quarterly earnings reveal that its problems are unlikely to end soon, thus curbing the chances of recovery in its stock.
Groupon announced weak first-quarter results, wherein its billings and revenue continued to decline. The company’s total revenue fell 21% year-over-year to $121.6 million and missed analysts’ sales forecast of $134.9 million. At the same time, billings decreased by 14%.
While its top line missed Street’s estimate, its bottom line came in better than what analysts forecasted. It delivered a net loss of $0.65 a share compared to the analysts’ estimate of a loss of $0.94 a share. Further, it compared favorably to the loss per share of $0.80 in the prior-year period.
Groupon’s interim CEO, Dusan Senkypl, termed Q1 “disappointing” and acknowledged that the company is facing significant challenges. Nonetheless, Senkypl sees 2023 as the year of transformation that will eventually pave the path for long-term success.
Senkypl expects Groupon’s local billings to increase by early 2024 as the company’s transformation strategy takes hold.
While the company focuses on transforming its business, short-term challenges could continue to hurt its financials.
Management expects its Q2 revenue to decline at a similar pace compared to Q1. Thereafter, the rate of decline is expected to moderate. Further, the company does not expect to generate positive adjusted EBITDA in 2023.
What’s the Prediction for GRPN Stock?
Given the slowdown in its business, analysts remain sidelined on GRPN stock. It has one Buy, one Hold, and two Sell recommendations for a Hold consensus rating. Meanwhile, analysts’ average price target of $7.38 indicates 85.89% upside potential.
