Please ensure Javascript is enabled for purposes of website accessibility

Why Groupon Stock Dropped 9% Today

By Rich Smith - Dec 17, 2019 at 6:29PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Goldman Sachs' downgrade became a self-fulfilling prophecy.

What happened

Shares of online coupon-hawker Groupon (GRPN -3.59%) tumbled as much as 10% in Tuesday trading before recovering just a bit to close the day down 9.1%.

You can blame Goldman Sachs for that.

Glowing red arrow trending down

Image source: Getty Images.

So what

Goldman downgraded the stock, saying in a note Tuesday morning that Groupon's customer base has shrunk for seven straight quarters, and that Goldman is finally throwing in the towel.  

Continued macroeconomic challenges, Goldman said, are going to weigh on billings and revenue, and will probably depress gross profit margins in the 2020 to 2021 period. And since Groupon is already unprofitable, that doesn't bode well for earnings growth -- or for the stock.  

Now what

According to Goldman Sachs, Groupon is only worth about $2.40 per share, and for that reason, the analyst thinks it's a sell. Investors dutifully complied and sold it off today, leaving the stock at $2.39 per share. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Groupon, Inc. Stock Quote
Groupon, Inc.
GRPN
$12.07 (-3.59%) $0.45

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/22/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.