Groupon Inc: GRPN Stock SOARS on Boffo Q2 Report

Groupon stock shoots 25% higher after a beat-and-raise quarter

GRPN - Groupon Inc: GRPN Stock SOARS on Boffo Q2 Report

Source: Jaysin Trevino via Flickr (Modified)

Maybe this is a comeback. Groupon Inc (NASDAQ:GRPN) appears to be getting results on its turnaround plan, as Wall Street is bidding up Groupon stock nearly 25% on a fantastic second-quarter earnings report.


Revenues came in at $756 million, which was more than enough to clear expectations of $711 million. Meanwhile, Groupon lost only half of what analysts thought it would, bleeding a cent per share of GRPN stock in red ink versus estimates of 2 cents.

The news is great looking forward, too. GRPN now expects revenues of $3 billion to $3.1 billion and adjusted EBITDA of $140 million to $165 million, which compares to the prior forecast of revenues of $2.75 billion to $3.05 billion and adjusted EBITDA of $85 million to $135 million.

In other words, Groupon’s traction isn’t temporary … though it sure looked like it would be just a few months ago.

Back in November 2015, Rich Williams came on board GRPN to head up the restructuring. A large part of the effort has been a focus on increasing marketing spend, and to the company’s credit, it has worked, including bringing in 1 million new North American users in Q1 of this year and more than a million in the latest quarter.

Wall Street was skeptical of this approach because of the hefty costs. After the Q1 results RBC Capital downgraded GRPN stock to “Underperform” from “Sector Perform” and lowered his price target to $3 from $4.

The money quote from analyst Mark Mahaney: The quarter “highlighted deteriorating fundamentals and substantial challenges for the company going forward.”

Perhaps not!

This story will be updated with extended analysis.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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