Groupon (NASDAQ:GRPN) has had a terrible 2014 -- year to date, shares are down more than 37%, badly under-performing the broader market.

But despite its severe under-performance, there may be some hope for Groupon shareholders: Although it remains a relatively expensive stock, an ongoing turnaround could  offer more adventurous investors some upside.

Not exactly a Warren Buffett pick
A pair of poor quarters has led to  Groupon's 2014 sell-off. In February, and again in May, Groupon reported results  that fell far short of analyst expectations. In both instances, Groupon's guidance was the culprit, as management's expectations came in less optimistic than estimates. That was also the case in October, but better-than-expected quarterly results lifted shares regardless. Still, it was not enough to offset the significant decline in the first half of the year.

Needless to say, not only is it unpredictable, but Groupon is far from a value stock. On a GAAP basis, it remains unprofitable, making it a difficult sell to bargain-minded investors. At the same time, despite Groupon's poor share price performance, the stock still trades for a lofty 50 times forward earnings, which is made all the more unattractive by the fact that management's guidance has consistently fallen short of analyst estimates.  

An ongoing transformation
Investor interest in Groupon, then, may come more from its potential rather than its financials. When it went public in late 2011, Groupon was still touting its prowess as a daily deals giant, a category it had largely invented and rode to unparalleled growth.

But the daily deals bubble appears to have burst -- Groupon's many competitors have largely fallen by the wayside, and the company has pivoted to become almost something else entirely.

To be clear, coupon deals still form the backbone of Groupon's business, but they are now delivered in a longer-lasting format. Groupon's management characterizes the company as a local deals platform -- a meeting place where merchants can target would-be shoppers in an online marketplace. It's a more compelling story, particularly because Groupon faces no true competitors in the space, but it's also, obviously, a more risky proposition, as it remains an unproven concept.

There's also the value of Ticket Monster, Groupon's Korean-based subsidiary. Although it was acquired just over a year ago, Ticket Monster has seen rapid growth under Groupon's stewardship, and the company is now looking to sell or partially spin off its Asian assets. Given the recent interest in Asian e-commerce (Alibaba, in particular), investor interest in Ticket Monster could reward Groupon shareholders.

Speculative, but might be suitable for some
If you're looking to buy shares in a reliable cash generator, Groupon is certainly not the stock you want. As a publicly traded company, it's largely been a disappointment, steadily trading lower since its public debut amid widespread concerns over not just its business model, but also its accounting practices. 

But with a new CEO, modern Groupon is a different company than the email-dependent start-up that once took the world by storm. Its mobile app, which accounts for more than half its business, has been downloaded more than 100 million times, and the company boasts more than 50 million active customers.

Groupon's goods business now generates about half of its revenue, but its local commerce deals still account for the bulk of Groupon's (almost 80%) profit. In an effort to drive growth, Groupon has been aggressively rolling out new initiatives, including its SEO-focused Pages and forthcoming location-based enhancements to its app. Groupon argues that these  initiatives will boost its business by driving better customers to its deals organically -- Groupon customers who come to the website from a search engine, for example, spend more than those who don't. The ultimate success of these moves remains to be seen, but Groupon could reward investors if it succeeds in establishing the local commerce platform it's striving to build.

Groupon's annual gross billings -- the total amount of revenue it takes in on the deals it sells -- is running the $7 billion range on an annual basis, but represents a mere fraction (less than 1%) of local commerce worldwide. It's certainly not a stock for everyone, but it could make sense for investors willing to take some risk.

Sam Mattera has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.