Groupon stock price analysis: to surge by between 45% and 85%

Groupon stock price has rebounded this year as its financial results showed that its turnaround was working. GRPN shares have risen in the last four consecutive weeks, and are hovering at the highest swing since March 11. It has jumped by 137% from its lowest level in 2024. 

Groupon’s turnaround is showing results

Groupon is an American company offering local e-commerce solutions across the country. At its peak, it was one of the top competitors to other companies in the industry like eBay and Amazon. It was so successful that it rejected a $6 billion buyout from Google. Today, the company has a market cap of $747 million.

Groupon has been affected by changing consumer behavior over time. In particular, the company’s business was affected by the growth of companies like Amazon and Walmart, which have subscription services that guarantee faster deliveries.

These packages have attracted millions of customers in the US, who prefer their solutions to other smaller e-commerce firms. Indeed, other e-commerce companies in the US like Etsy and eBay have also slipped in the past few years.

Groupon’s business has also been affected by the management’s decision to slash marketing costs as a percentage to its revenues.

In the past few years, however, the management has been working to turn the company around by focusing on three pillars: marketplace health, platform modernization, and financial strength.

There are signs that these pillars are progressing well. For example, in its marketplace health, the company has stopped chasing volume, and shifting to focusing on value. This strategy is working as its billings have improved after falling a few years ago.

Further, on platform modernization, the company is now focusing on data-driven marketing to grow its sales, while its finances have moved from negative EBITDA and free cash flow toa positive one.

Improving financials and return to growth 

Groupon’s business has been losing ground in the past few years as its annual revenues have plunged. Data shows that its annual revenue dropped from $1.416 billion in 2020 to $967 million in 2021.

Sales then dropped to $967 million in 2021, $599 million in 2022, $514 million in 2023, and $492 million in 2024.

Analysts believe that the company’s trend could be about to change, helped by the management’s turnaround efforts. As a result, the average estimate among analysts is that its annual revenue will be $496 million this year followed by $533 million in 2026.

The management, on the other hand, estimates that its revenue will be between $493 million and $500 million this year. Most importantly, after recording negative EBITDA for years, the company expects that its EBITDA metric will grow to between $70 million and $75 million. Its free cash flow will be at least $41 million.

Therefore, this progress will likely help to support its stock price in the coming months since the current numbers show that it is a highly overvalued company.

Groupon stock price analysis 

GRPN stock chart | Source: TradingView

The weekly chart shows that the Groupon stock price has been in a strong recovery in the past few weeks. It jumped and now sits at a crucial resistance level where it has failed to move above two times before.

GRPN stock has formed an ascending triangle pattern, a popular continuation sign in technical analysis. The stock sits above the 50-week moving average, and slightly above the 23.6% Fibonacci Retracement level.

Therefore, the path of the least resistance for the stock is bullish, with the next resistance level to watch being at $26.70, the 38.2% Fibonacci Retracement level, which is about 45% above the current level. A move above that level will bring the 50% retracement at $34, up by 82% from the current point.

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