Groupon’s (GRPN, Financial) turnaround has been a success story till now as the stock has gained over 25% in the last few months. The company’s above average quarterly report also helped its upsurge and looking at the company’s prospects, I think this trend may continue. Let’s take a deeper look into the company’s future plans and its recent result.
The road ahead
Groupon's Q3 revenues jumped 27% year-over-year to $757.1 million, surpassing the estimates of $748.8 million. Adjusted EPS of $0.03 was additionally in front of the Street's target of $0.01 for the quarter.
Amid the quarter, Groupon saw gross billings grow 39% to $1.86 billion. North America billings enhanced 16% and that of EMEA developed 10% through the year. They reported a great 155% in billings from the Rest of World, however that was credited to the acquisition of Ticket Monster a year ago. The increment in gross billings meant a development of 16% in North American revenues, 56% in EMEA revenues and 26% in revenues from the Rest of World.
At the point when Groupon reported earnings, it proclaimed that it was investigating vital plan B for its Asian resources, specifically, Korean-based Ticket Monster. It was an intriguing publication, given that Groupon had just bought Ticket Monster one year former, yet could eventually profit shareholders.
Under Groupon's proprietorship, Ticket Monster has experienced quick development, outpacing Groupon's center business. That development, consolidated with a late Wall Street enthusiasm toward Asian e-business, could bring about Ticket Monster accepting a good valuation.
Groupon doesn't hope to offer all of Ticket Monster, yet a halfway turn off could give investors a feeling of Ticket Monster's worth. By then, Groupon's held proprietorship stake would be seen as significant resource.
Groupon's Q2 didn't go and Q3. Regardless of recording a benefit, the organization neglected to inspire investors. Consequently, its stock price plunged 49%. There were two noteworthy reasons why the apparently positive second-quarter earnings set off a breakdown in the stock.
Likewise, company has distinguished a couple of verticals that will enhance the client experience. The main concentrates on expanding supply so Groupon can give the best arrangements to its clients. Groupon likewise noted that it needs to guarantee that it gets the privilege bargains before the privilege clients. Through these moves, the organization ought to have the capacity to pull in more clients and shippers to its stage.
At long last, to enhance its monetary record further, Groupon administration is arranging (The Wall Street Journal membership needed) to auction some of its stake in Ticket Monster, which it purchased 10 months back for $260 million.
Conclusion
Although Groupon has a few headwinds going forward, it has the potential to grow. It may not be an ideal stock for value investors but the risk to reward ratio is good and investors can count on a good year for Groupon. Thus, Groupon is a good buy at present valuation.
