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Why Groupon Stock Lost 15% in July

By Demitri Kalogeropoulos – Aug 4, 2020 at 8:55AM

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Investors are bracing for earnings results from the shopping service this week.

What happened

Groupon (GRPN -4.06%) stock underperformed a booming market last month. Shares fell 15% compared to a 5.5% increase in the S&P 500 in July, according to data provided by S&P Global Market Intelligence.

The slump added to a difficult year for investors in the shopping app service, with shares down over 60% so far in 2020.

A young woman sitting on a couch with a laptop in her lap, smiling at the screen and holding a credit card

Image source: Getty Images.

So what

Investors are worried that Groupon's focus on local, consumer discretionary services like travel experiences and restaurant reservations makes it especially vulnerable to COVID-19 challenges. The company has admitted as much, saying in mid-June that the public health crisis could have a "deep and prolonged impact on our business."

Now what

To its credit, Groupon quickly responded to the coronavirus pandemic by working to shift its focus toward selling products rather than marketing experiences such as restaurant bookings. The company has moved to slash costs in recent weeks, too.

Investors will get critical updates on both initiatives when Groupon reports fiscal second-quarter results after the market closes on Aug. 6. Wall Street pros are predicting some brutal metrics in that announcement, with sales likely diving by over 60% as losses land near $2.75 per share. Investors will be keenly focused on management's comments on prospects for a rebound even as many local economies remain stressed.

Demitri Kalogeropoulos 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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