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Why Groupon's Stock Is Falling Again

By Rich Duprey – Jun 17, 2020 at 11:13AM

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The discount marketplace's first-quarter results beat expectations, but its shares slid.

What happened

Groupon (GRPN -2.94%) delivered a better-than-expected first-quarter earnings report after the market closed Tuesday -- a day during which shares had soared almost 13%. But the discount marketplace's stock tumbled 9% in Wednesday morning trading.

So what

Despite reporting a narrower-than-anticipated adjusted loss and beating expectations on sales, shares of Groupon fell Wednesday; the broader market indexes also opened lower as investors reacted to news that the numbers of new cases of COVID-19 were rising in parts of the U.S.

Man holding head in front of a declining stock chart

Image source: Getty Images.

Now what

Although the discount coupon provider soared more than 10% in after-hours trading Tuesday, the morning brought on a more somber outlook as traders grew concerned that markets and retailing could remain troubled for a longer period than they had been hoping for.

Groupon reported gross billings of $526.7 million, down 31.5% year over year, with gross profits plunging 34% to $201 million. But its adjusted loss of $1.63 per share was $0.28 per share better than what Wall Street had been looking for.

The company initiated a restructuring plan at the outset of the pandemic that is intended to save it $100 million in 2020 and $125 million in 2021. "Once fully implemented, we expect our multi-phase restructuring plan to deliver approximately $225 million in annualized cost savings," said interim CEO Aaron Cooper.

Cooper also expects that Groupon's "distinct competitive advantages" will allow it to gain market share in the fragmented industry.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Groupon, Inc. Stock Quote
Groupon, Inc.
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