Groupon’s turnaround is accelerating, Roth says

Roth MKM analyst Sean McGowan is liking what he sees from Groupon (Groupon Stock Quote, Chart, News, Analysts, Financials NASDAQ:GRPN).

On March 15, GRPN reported its Q4 and fiscal 2023 results. In the fourth quarter, the company posted Adjusted EBITDA of $26.9-million on revenue of $137.7-billion, a topline that was down 7% from the same period a year prior.

“I am pleased to report another quarter of progress,” interim CEO Dusan Senkypl said. “Significant improvement in our North America local and travel categories is a positive indicator that our transformation plan is working. In addition, our improved financial performance and increased liquidity resolves our going concern issue. I would like to thank our team for their tireless contributions as we come to the end of this phase of our transformation. At the same time, our mission to build Groupon into the ultimate destination for local experiences and services is just getting started.”

McGowan says this quarter is evidence that GRPN’s turnaround is accelerating.

“We believe GRPN’s results for 4Q’23 validate our thesis that we will see continual improvement in gross billings, revenue, revenue as a % of gross billings, operating expenses and adjusted EBITDA,” the analyst wrote. “Importantly, the steps the company took to improve liquidity earlier this year ($80M equity sale and repayment of short-term debt) have removed the “going concern” doubt that we believe had weighed on the stock in recent quarters.”

In a research update to clients March 15, McGowan maintained his “Buy” rating and price target of $28.00 on GRPN.

The analyst thinks Groupon will post EBITDA of $115.7-million on revenue of $547.5-million in fiscal 2024. He expects those numbers will improve to EBITDA of $141.4-million on a topline of $598.7-million the following year.

“The improvement in operations and added liquidity from the $80M equity raise and repayment of short term debt has led management to conclude that there is no longer doubt as to its ability to continue as a going concern,” he added.