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Why Groupon Stock Slumped on Friday

By Brett Schafer – Aug 6, 2021 at 5:20PM

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Investors were not impressed with the company's latest earnings report.

What happened

Shares of Groupon (GRPN -5.74%) took a tumble on Friday after the company reported second-quarter earnings. The stock was actually up as much as 16.9% this morning but sold off heavily in afternoon trading. At the close, it was down 14.1% on the day.

So what

Groupon reported earnings for the three months ending June 30. Adjusted earnings per share (EPS) came in at $0.33 for the quarter, which beat the consensus analyst estimate of $0.22 heading into the report. This earnings beat was the likely reason shares were soaring in pre-market and early trading on Friday.

A man leaning against a window looking disappointed.

Image source: Getty Images.

While the headline earnings number looked great, it doesn't seem like investors were happy with the rest of the report. Revenue was down 33% year over year in the quarter to $266 million while marketing expenses increased 73% to $43.7 million. Groupon also had negative free cash flow of $43.3 million in the period, showing how the company is struggling to generate cash.

Now what

Groupon's adjusted EPS number looked good this quarter, but history shows that this company is unworthy of an investment. Revenue has decreased every year since 2016 and is on pace to fall again after this latest quarter. The stock is down 95% since it went public in 2012, and if the business continues heading in the wrong direction, it will only continue falling from here.

Brett Schafer 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.

Stocks Mentioned

Groupon Stock Quote
Groupon
GRPN
$7.06 (-5.74%) $0.43

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