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Groupon - AI Stock Analysis

Analysis generated October 1, 2024

Groupon, Inc. is a global e-commerce marketplace connecting consumers with local merchants. The company was established in 2008 and quickly gained popularity by offering deal-of-the-day discount coupons. Groupon's primary market segments include local businesses, travel, products, and events. Despite the early success, Groupon has faced significant challenges in maintaining growth and profitability in recent years.

Fundamental Analysis

The recent financial performance of Groupon is as follows:

• Revenue: The last quarter's revenue was $111 million, representing a significant decrease of 28.95% compared to the previous quarter and a 7.33% decrease compared to the same quarter last year. This substantial drop indicates potential problems in revenue generation and calls for concern.
• Net Income: Groupon reported a net income of $12 million for the last quarter. While this is an impressive year-over-year increase of 57.90%, it marks a dramatic 144.30% decrease from the previous quarter indicating a substantial volatility in profitability.
• EBITDA: The last quarter's EBITDA was $2.6 million. This figure signifies a year-over-year increase of 87.23%, which is positive. However, the quarter-over-quarter decrease of 107.05% is concerning.
• P/E Ratio: Groupon's current Price to Earnings ratio stands at 3.56. A low P/E ratio such as this can suggest that the stock is undervalued, potentially making it attractive to value investors, but it may also reflect the market's skepticism about future growth.

Technical Analysis

The technical indicators for Groupon's stock are noteworthy:

• Stock Price: The current stock price is $9.47. Over the past month, the stock price has decreased by 31.72%. Over the past year, it has decreased by 39.87%, indicating a long-term downtrend.
• Trend: The price trend is bearish. The 10-day simple moving average (SMA10) is 10.14, down from the previous 10.28, suggesting a potential continuation of the downward trend.
• RSI: The Relative Strength Index (RSI) stands at 36.8, indicating a neutral condition. While not in the oversold territory, it suggests investors are cautious.

Alternative Data Analysis

Alternative data provides additional insights:

• Job Postings: Groupon has 181 open positions, a 121% increase in the last couple of months. This growth might suggest expansion plans and positive development.
• Business Outlook: Over the last couple of months, the business outlook has improved by 23%, indicating a more optimistic view from analysts and stakeholders.
• Website Visitors: Groupon has approximately 25 million visitors on their website, with no notable trends in fluctuation over recent months.
• App Downloads: Estimated at 6,000 daily downloads, but there is a concerning 14% decline in recent months, suggesting waning consumer interest.
• Social Media Engagement: Groupon has 340,000 Instagram followers and 130,000 Twitter followers. Engagement on these platforms has been stagnant, indicating a lack of growing interest.
• AI Score: According to AltIndex, Groupon's AI score is 36, signaling a "Sell" recommendation.

Conclusion and Recommendation

Groupon presents a mixed bag of opportunities and challenges. While some fundamental metrics indicate potential, such as the low P/E ratio and positive net income and EBITDA growth year-over-year, there are significant concerns regarding the substantial drop in revenue and net income quarter-over-quarter. The bearish trend seen in technical analysis, along with a steep year-long decline in stock price, suggests caution is warranted. Moreover, alternative data points such as a drop in app downloads and stagnant social media engagement do not paint an optimistic picture.

Considering the combination of declining revenue, volatile net income, bearish technical indicators, and the AI recommended sell score, the overall outlook for Groupon's stock is currently unfavorable. For risk-averse investors, it may be prudent to steer clear of Groupon until signs of sustained improvement become evident. For value investors willing to take on higher risk in hopes of a turnaround, the low P/E ratio might present a potential but speculative buy.

Disclaimer: This AI stock analysis, generated by an experimental AI tool, is for informational purposes only and not financial advice. Information is based on publicly available data and may not always be accurate or current.