Groupon Stock Spikes 50% as Turnaround Shows Signs of Progress – Barron’s

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Groupon shares rose as much as 50% after the companys June-quarter results showed encouraging signs of a turnaround.

The company, specializing in online offers for consumer experiences, dining, and health and beauty services, posted revenue of $396 million, down 26% from a year ago, but almost twice the roughly $200 million Wall Street expected. Groupon (ticker: GRPN) reported a loss of 93 cents a share, smaller than the Streets consensus loss forecast of $2.75 a share.

Adjusted earnings before interest, taxes, depreciation and amortization was $1.3 million. Global units sold were down 35%, reflecting the impact on demand for consumer experiences that has flowed from the Covid-19 pandemic.

Despite the continuing challenges created by Covid-19, we have made meaningful progress toward stabilizing our business with the goal of returning Groupon to growth, interim CEO Aaron Cooper said in a statement. In the past four months, we have created significant operating leverage by taking substantial costs out of our business, leaned into categories to drive sales and free cash flow, and steadied the company during the pandemic.

He said the company has a plan to focus on the $1 trillion local market, and is well positioned for the future.

Groupon said it is focused on two areas to turn around the business: expanding inventory and improve merchants and customers experiences. We believe that growing high quality inventory in a targeted set of Local experiences and markets is key to unlocking the potential of our two-sided marketplace, the company said. Therefore, the majority of our efforts in the near-term will be focused on expanding inventory in key markets and types of experiences.

Groupon said cost cutting will bring in $140 million in savings in 2020, and $200 million in 2021, eventually increasing to a $225 million reduction in run-rate expenses. The company said it ended the quarter with $800 million in cash and $70 million of positive free cash flow.

The company said if July trends continue, it would post $10 million in adjusted Ebitda for the September quarter.

At midday Friday, Groupon shares were up 48% to $24.38. They have traded as high as $25.38.

Write to Eric J. Savitz at eric.savitz@barrons.com

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Groupon Stock Spikes 50% as Turnaround Shows Signs of Progress - Barron's

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