But it has risen 25% so far this year – and 146% over the past year. Here are three things I like about the Groupon investment case.

1. Established name in a shifting market

Groupon has come a long way from its early days selling group deals.

It has shifted to a more localised approach focused on individual deals that help drive traffic to local businesses. In that sense, it is tapping into some of the large markets that used to be dominated by adverts in local newspapers like the Bolton News and Shetland Times.

The company’s pivot shows that it has been learning from its mistakes and is willing to evolve to stay relevant in a shifting digital marketplace. It has a known brand, large customer base and technical expertise that help it do that.

2. Financial performance is improving

Groupon is now benefitting from a management team that has substantial experience in digital marketplaces in central Europe. The chief executive represents an investor that owns over a fifth of all Groupon stock. That suggests management has both the intention and capability to turn the ship around.

I think that is starting to show in the company’s financial performance. In the first quarter, revenue of $123m was just 1% higher than the same period last year. But that meant consolidated revenues returned to growth for the first time since 2016.

Even better, the basic net loss per share fell 65%. I would prefer a business that is profitable so, for now, I will not be buying Groupon stock. Nonetheless, I think the sharply reduced loss is significant. Management seems to be making the business more efficient. That can let it benefit from its strengths, which I think could lay the foundation for long-term financial success.

With $159m of cash at the end of the quarter (equivalent to over a quarter of its current market capitalisation), I think the company is in a strong position to improve financial performance and start turning a profit.

3. Large potential audience

The quarter was not all good. Active customers fell 6% in North America and by 19% internationally year-on-year.

Then again, shedding some customers while growing revenues and reducing losses may be the right medicine. Sometimes, certain customers cost a business money rather than making it. Groupon’s strategic approach to targeting selected markets is paying off, in my view.

If it can prove that model is right, the potential market size is significant – and it is only scratching the surface.

I’m waiting and watching

But while there are reasons I would consider buying Groupon stock, I do see some red flags. It is still loss making, the customer loss could be more problematic than I expect and the business is essentially in turnaround mode. A lot of work is yet to be done.

So for now, I am watching keenly without buying.

The post 3 reasons I’d consider buying Groupon stock appeared first on The Motley Fool UK.

After a downbeat few days, European markets turned upwards this morning and have made modest gains so far. Sentiment was helped by overnight news that Chinese exports rose by 5.1% in July, while imports rose by 10.9%. German exports also rose by 0.6% in June, compared to May. Markets also received a boost from the European Central Bank, which said, in its latest monthly bulletin, that its “monetary policy stance will remain accommodative for as long as necessary”, stemming fears that will attempt to raise interest rates in the foreseeable future. At 7am ET, the FTSE 100 was up 0.50%, the DAX was up 0.67% and the CAC 40 was up 0.62%.

In the US today, the latest weekly jobless claims figures will be published at 8.30am ET. Analysts’ consensus forecasts indicate that 339,000 new unemployment claims may have been made last week, up slightly from 326,000 claims during the previous week.

In corporate news, electric utility AES reported second-quarter adjusted earnings of $0.32 per share and reaffirmed its full-year guidance for the year, despite citing “significant headwinds” in Latin America. Other companies due to report before the opening bell this morning include Dean Foods, Scripps Networks Interactive, Beam and NVIDIA, along with Hillshire Brands. Amongst those due to report after the close tonight is Priceline.com, which analysts expect to report second-quarter earnings of $9.38 per share on revenue of $1.65bn.

Tesla stock may also be in demand when markets open. After rising by 208% during the second quarter and by 296% so far this year, Tesla stock was up by a further 14% in pre-market trading this morning, after the electric car company beat analysts’ expectations last night with second-quarter adjusted profit of $0.20 per share. Analysts had been expecting a quarterly loss of $0.17 per share. Groupon (NASDAQ: GRPN.US) may also rise when markets open — the stock gained 22% in pre-market trading this morning after the firm reported a 7.1% increase in second-quarter sales and a reduced net loss.

Finally, let’s not forget the Dow’s daily movements can add up to some serious long-term gains. Indeed, Warren Buffett recently wrote: “The Dow advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions.“

If you, like Buffett, are convinced about the long-term power of the Dow, you should read “5 Stocks To Retire On“. Your long-term wealth could be transformed, even in this uncertain economy. Simply click here now to download this free, no-obligation report.

> Roland does not own shares in any of the companies mentioned in this article.

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