Groupon Inc (NASDAQ:GRPN) stock had a big year in 2017. Heading into the year, Groupon had exited 32 countries. It had cut its headcount — and the operating expenses that went with those employees. At the same time, the company ramped up its advertising — notably offline — to drive revenue growth and hopefully propel GRPN stock higher.

Even with Groupon stock off nearly 10% on Wednesday after fourth-quarter earnings, the company has had some success. Adjusted EBITDA rose sharply in both Q4 and for the full year. Billings continue to be flat, but the company’s emphasis on Local over Goods is a contributor there.

All things equal, 2017 was at worst a decent year for Groupon.

And yet, GRPN stock trades at the moment at $4.69. Groupon stock closed 364 days ago — the day of its Q4 2016 earnings report — at $4.64. So 2017 was good — but not good enough to really move the needle. That problem seems likely to continue into 2018.

Q4 Earnings

As far as headline numbers go, Groupon’s Q4 performance was a mixed bag. Adjusted EPS of $0.07 was $0.02 short of consensus. A revenue decline of 3.5%, however, was two points better than Street estimates.

Overall, the quarter itself doesn’t seem to change the investment case for GRPN all that much. The company’s initiatives are showing some success. Groupon has focused on gross profit dollar growth — not just revenue — and those figures grew across the board in Q4.

Active customers rose in both North America and the overseas business. Marketing expense rose 23% y/y, per the company’s Q4 presentation. And lower SG&A boosted profits, with Adjusted EBITDA growing 31% over Q4 2016.

Nothing there is a surprise; indeed, the numbers reflect Groupon’s strategy. And with Adjusted EBITDA growing nicely and hitting an all-time record, that strategy is showing some success.

But so far, investors don’t see it as enough success — with good reason.

The Concerns Facing GRPN Stock

The driver of the decline in Groupon stock is likely the company’s 2018 guidance. In the earnings presentation, Groupon projected $2.6 billion in revenue next year, a nearly 10% decline (after a 6% fall in 2017). Street estimates were at $2.91 billion, implying nearly 3% growth. Adjusted EBITDA guidance of $260-$270 million was similarly light, though closer to the $271.7 million consensus.

The problem is that both figures suggest that Groupon’s initiatives are running out of stream.

Adjusted EBITDA rose 39% in 2017. It’s guided up just 6% in 2018. The cost-cutting and gross profit dollar focus that drove 2017’s improvements aren’t going to have the same impact in 2018. And that in turn raises the question of how, exactly, Groupon is supposed to grow.

It’s a valid question.

The bear case for GRPN stock — which remains heavily shorted — is that the business model simply isn’t viable. Most of the discounts come from struggling companies just trying to stay afloat. That means huge amount of churn in suppliers — and a huge workforce. Groupon’s revenue per employee is just $425,000 — one-quarter that of Facebook Inc (NASDAQ:FB) — despite substantially lower gross margins. This is an old-school, low-margin, sales-heavy business. It’s not like other tech stocks benefiting from huge operating leverage: FB’s operating margins are over 50%; Groupon’s are barely 4%.

So if revenue doesn’t grow, and Groupon’s cost-cutting benefits are running out, growth is coming to an end. And if that’s the case, Groupon isn’t cheap enough

Buy Groupon Stock?

The good news is that Groupon stock is somewhat cheap. EV/EBITDA based on 2018 guidance is barely 7x. Backing out net cash, the stock trades around 20x 2018 free cash flow. And that cash, as InvestorPlace contributor Tom Taulli pointed out last month, gives the company plenty of time to improve its business.

But I can’t help but think there are better plays in the Internet space. Match Group Inc (NASDAQ:MTCH) is more expensive — but has catalysts to grow into the valuation. Yelp Inc (NYSE:YELP) has much better margins. I’d even rather pay up for Shopify Inc (NYSE:SHOP), who serves winning small businesses, rather than Groupon’s more locally-focused and more cash-strapped base.

Now that it’s back at $4+, GRPN stock isn’t a bad pick, necessarily. It is cheap, and there may be enough cost-cutting to drive some growth going forward. At this valuation, some growth is enough for some upside.

At the same time, however, Groupon stock has been stuck in a range for about three years now. And Q4 earnings not only aren’t enough to get GRPN out of that range, they raise the concern that GRPN never will.

At the end of the day, investors in any stock are buying that business. The core problem with Groupon’s business is that it simply doesn’t look that attractive.

As of this writing, Vince Martin has no positions in any securities mentioned.