Groupon Stock Analysis (NASDAQ:GRPN)
Groupon Analysis Video
Groupon stock analysis must look at the comprehensive business model of the firm. The firm which was once marked as the fastest growing company has shown few positive signs for investors recently. Groupon valuation peaked at over $13 billion after it was listed for $20 However since then the stock has lost over two-third value as can be seen from Groupon stock price history. The loss of faith by the investors has been due to consensus that the current business model cannot be sustained for long.
Groupon Inc Stock Rating (1.5/5)
Should you buy GRPN stock?
- Long term revenue growth has been strong with a 5 year compounded annual growth of 14.1%.
- Groupon has a healthy FCF (Free Cash Flow) margin of 28.8%.
Should you sell GRPN stock?
- Groupon registered a negative operating margin of -3.5% (average) over the Trailing Twelve Months (TTM).
- Groupon posted an average Net loss of -6.2% in the last twelve months.
- Groupon has a debt/equity ratio of 0.68, which is worse than the average in the Retail-Wholesale sector.
- PE ratio is meaningless for GRPN stock as the company has losses.
- A negative ROE of -53.4% indicates that the company is not able to generate profits with the money shareholders have invested.
Groupon started by giving deals of the day to its customers. This was a great way to get a bargain for the end customers and for the business owners to give bulk discount and get additional advertising. However it led to several issues like the business owners not being able to cater to excess demand and lower quality of products. Groupon performance in the market has also been hit by the fact that it has still not shown profitability to the investors. Many other similar business models have fallen in the dust and none of them have shown a sustainable working model. Groupon revenue and Groupon assets have not increased significantly either.