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Why Groupon Stock Was Falling on Monday

By Brett Schafer – Aug 9, 2021 at 12:23PM

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The stock got downgraded by Wall Street analysts and saw some bad news come out of the United Kingdom.

What happened

Shares of Groupon (GRPN 3.19%) slumped Monday morning after some troubling news out of the United Kingdom and analyst downgrades. The stock was down as much as 9% on the day. As of 11:42 a.m. EDT, shares had fallen 6.7%.

So what

Last week, Groupon announced its earnings for the second quarter, ending in June. Revenue was down 33% year over year to $266 million, while it had a net loss of $3.1 million. Investors were not excited with these results, selling off Groupon stock on Friday by as much as 17%.

A man sitting at a laptop with a hand over his eyes.

Image source: Getty Images.

The pain has continued Monday morning for Groupon shareholders. Three analysts lowered their price targets on Groupon, including Credit Suisse, which lowered its expectations from $42 a share down to $38. This is higher than the $29 that Groupon currently trades at, but investors were still not happy about the news.

What's more, Groupon got some potentially troubling news out of the United Kingdom when the Competition and Markets Authority (CMA) investigated the company and found evidence that it does not always provide customers with the refunds they are entitled to.

Now what

There haven't been any repercussions from the CMA report, but the news has the potential to be devastating for Groupon. If the company has not properly paid out expenses it owes to customers, its financials might be in even worse shape than they look right now. Couple that with a terrible earnings report, and it looks like investors should stay far away from this company, no matter how cheap shares get. 

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.

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