Why Groupon Stock Exploded Higher This Week

Since last Friday, shares of the e-commerce company Groupon (NASDAQ: GRPN) have blasted 37% higher as of 2:42 p.m. ET Thursday. The company reported better-than-expected earnings and showed meaningful progress in its turnaround plan.

A solid earnings beat and guidance

Groupon reported a fourth-quarter net loss per share of $1.20 on total revenue of $130.4 million, which beat analyst estimates. The company also reported adjusted earnings of $18.7 million, which came in $800,000 higher than estimates.

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In a statement with the earnings report, CEO Dusan Senkypl said:

In 2024, we successfully executed our transformation strategy, returning North America Local to growth and generating positive free cash flow for the first time since exiting the pandemic. After a bumpy Q3, we rebounded nicely in the fourth quarter, with North America Local Billings growing 8%. We enter 2025 with momentum and a stronger foundation to accelerate growth.

Management provided a nice surprise on its outlook for the year, saying it expects full-year revenue to be anywhere from flat to 2% higher in 2025, ahead of estimates. The company also expects about $70 million to $75 million of adjusted earnings and free cash flow of at least $41 million.

Executing the transformation

Groupon has struggled in recent years. Senkypl, whose fund Pale Fire Capital made a strategic investment in Groupon, took over as CEO last year. The company has now streamlined its expense base and operations and has set its sights on returning to growth.

Trading at about 13 times forward earnings, the stock is not overly expensive even after this latest run, so the future looks much brighter than it once did.

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Bram Berkowitz 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.