Groupon Inc (NASDAQ:GRPN) has been a lot in the news lately, following a 5.6% stake in the company by Alibaba. However, the move from the Chinese ecommerce giant has confused a number of investors, since most had been dumping the stock. The question on the minds of most investors is: “What does Alibaba see in Groupon?” The company’s most recent financial report seems to have given investors a partial answer to this question.
Groupon had recently released its latest earnings report and has been successful in beating consensus estimates. However, the company does still remain unprofitable, with an EPS of -$0.02. Added to this, Groupon is also streamlining its business and has identified its top ten and worst markets. A more detailed analysis has revealed that there had been a surge in sales in North America, which was particularly responsible for the improved earnings.
Apart from the improved finances, Groupon has undergone some changes in management, including the appointment of a new CEO. The first order of business for the new executive was revising the business model of the company to make it more efficient. The initial model demanded that a large number of people signed up in order to obtain a large discount. The new model, on the other hand, has no such conditions and offers only standard discounts. Furthermore, the new CEO also shifted the company’s focus on its core market in North America, whose success is visible in the latest filing.
Added to this, GRPN makes for a nice compliment to Alibaba’s business. The two companies can potentially work together to improve sales and improve profits. Groupon can very well become a marketing platform for merchants on Alibaba. Furthermore, Groupon is operating in a larger geographic region than Alibaba, which could mean that it can help Alibaba expand its business in those regions as well.
Groupon Inc (NASDAQ:GRPN) recorded a decline of 7.11% during the February 17 session, to reach a close at $3.79, after experiencing trade volumes of 52.89 million.