Please ensure Javascript is enabled for purposes of website accessibility

Why Groupon Stock Was Falling on Tuesday

By John Ballard – Aug 10, 2021 at 2:15PM

Key Points

  • One analyst lowered the price target on the shares, adding to the negative news stories about the company in recent days.
  • Falling sales and potential legal issues don't make for a good investment.

Motley Fool Issues Rare “All In” Buy Alert

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

The bad news keeps piling on for the digital coupon service.

What happened

Shares of Groupon (GRPN 0.87%) were down 6.9% at 12:20 p.m. EDT on Tuesday, after Ascendiant Capital Markets cut its price target on the stock from $70 to $40. 

GRPN Chart

GRPN data by YCharts

So what

It's been a bad couple of weeks for Groupon. On Aug. 5, the company reported disappointing earnings results, with sales falling 33% in the recent quarter. There was also troubling news in the U.K., where the Competition and Market Authority called on Groupon to make changes to how it treats its customers. The CMA has been investigating the company for possible violations to consumer protection law in the U.K. since April 2021. 

On Monday, a third blow came with news that the Pomerantz law firm was investigating whether certain officers and/or directors of the company engaged in "securities fraud or other unlawful business practices," according to a release from PR Newswire. 

A customer looking at a mobile phone in a grocery store.

Image source: Getty Images.

Now what

Even if we ignore the legal issues and focus on Groupon's business performance, Groupon is not a stock that investors should expect to profit from. Sales are down 44%, 29%, and 33% over the last three quarters, which shows a business struggling to hang on to customers.

Investors should avoid Groupon for now. There are better stocks to consider for long-term investment.

John Ballard 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.

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 Stock Quote
Groupon
GRPN
$8.09 (0.87%) $0.07

*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 analyst team.

Stock Advisor Returns
351%
 
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 11/30/2022.

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.