Groupon (GRPN 0.60%) has been an interesting story of late. The company is in the midst of a multiyear turnaround, and shares were up a whopping 60% this year as of this writing. Of course, that's largely because the stock had fallen so far to begin with, as the current price of just over $5 per share is still a far cry from the stock's $20 IPO price back in 2011. 

Can management keep up the momentum and send shares back to previous heights? The answer may lie in a potentially transformational product unveiled this year.

GRPN Year to Date Price Returns (Daily) Chart

GRPN Year to Date Price Returns (Daily) data by YCharts

The current state of Groupon

Groupon brought on Rich Williams as its new CEO in late 2015, replacing  company co-founder Eric Lefkofsky. Williams had been the company's chief operating officer and an Amazon executive before that. In his attempt to right the ship, Williams is working on refocusing the business on its most profitable services and geographies. The four pillars of his turnaround plan are:

  1. Streamline and simplify the business.
  2. Increase the number of customers.
  3. Exit less profitable product lines and geographies.
  4. Improve the overall customer experience.

The company has been successful in its downsizing efforts, culling product lines and reducing its international footprint from 47 countries to just 15. Still, streamlining and downsizing, while necessary, are not likely to send Groupon's stock soaring. Only No. 2 on the list (growing new customers), which will likely be brought about by No. 4 (improving the customer experience), is likely to do that.

Which brings me to Groupon+.

A man at a table on  the phone looking at his credit card.

Groupon wants to link seamlessly with your credit card. Image source: Getty Images.

Discounts without the voucher

Groupon+ was rolled out earlier this year and in early September the company trumpeted the restaurant deals (more than 1,500 participating restaurants in 23 U.S. markets) available under this low-friction system. Groupon+ is, in many ways, a reinvention of Groupon's core product. Traditionally, customers would have to buy their Groupon voucher, print the coupon, and use it within a certain time frame.

With Groupon+, however, you can directly link your Groupon account to your Visa or Mastercard credit or debit card. If you click on a Groupon+ deal, all you need to do is use your card at the participating location and Groupon will send you the discount as cash back on your account.

The exciting part about Groupon+ is that it removes two big pain points of using Groupon: You don't have to pre-pay, and you don't have to print a voucher and hand it over to the merchant, saving both time, printer ink, and, if you're using Groupon on a date at an expensive restaurant, embarrassment. 

Next big thing?

Groupon seems to have successfully retrenched, intentionally going after profitability at the expense of revenue. In the third quarter, Groupon's revenue declined 7.6%, yet gross profit increased 5.5%, adjusted EBITDA grew 43%, and net income swung from a $38 million loss to roughly breakeven.

While increased profitability is certainly impressive, this bull market really loves growth. If Groupon+ can reignite customer frequency and therefore top-line growth, the market would likely reward Groupon shareholders.

In the third quarter, Groupon doubled the number of Groupon+ markets to 23, and rapidly grew deals on the new platform. Moreover, the Mastercard partnership only closed in the third quarter, and the combined Visa-Mastercard footprint now covers about 80% of U.S. consumers. In addition, marketing spend surged 20% as the company aggressively advertised Groupon+ in three cities.

Right now, Groupon+ is only focused on food and beverages, but management is looking to expand the service to other categories later in 2018. Management was very positive on the last earnings call, saying customer adoption and redemption is very strong, and that merchants sign up for Groupon+ at two to five times the rate of the traditional voucher program.Those are both very positive trends.

Groupon has had quite a run in 2017, but if Groupon+ leads to more consumer engagement, and therefore, revenue growth, the stock's comeback may just be getting started.