Last Update 09 Jan 26

GRPN: Higher Discount Rate And P/E Framework Will Support Future Upside

Analysts have reaffirmed their price target on Groupon at $35.33, reflecting updated views on discount rate and forward P/E assumptions while keeping their fair value estimate unchanged.

Analyst Commentary

Analysts are using Groupon’s reaffirmed US$35.33 price target as a reference point to think about what needs to go right, and what could still go wrong, around discount rates and forward P/E assumptions.

Bullish Takeaways

Bullish analysts view the reaffirmed target as a sign that current discount rate and P/E inputs already attempt to capture key risks, so they see less need for a valuation reset based on the latest information.
They tend to see the forward P/E framework as giving Groupon room to execute on any growth or margin initiatives without requiring a change to the fair value estimate right away.
Supportive views generally frame the unchanged fair value as a sign that recent data points have not weakened the long term case embedded in the existing valuation work.
Some bullish analysts highlight that staying with the same fair value while adjusting underlying assumptions can signal confidence in the overall structure of the model, including how it treats discount rates and future earnings power.

Bearish Takeaways

Bearish analysts focus on the sensitivity of Groupon’s valuation to discount rate inputs, and see a risk that any further changes here could have an outsized impact on fair value even if the headline target is currently unchanged.
They point out that reliance on forward P/E requires Groupon to deliver against earnings expectations, so any execution missteps could put pressure on the justification for the US$35.33 target.
Some cautious views emphasize that keeping the same fair value despite updated assumptions may leave less margin of safety if conditions change or if earnings estimates are revised.
More skeptical analysts treat the reaffirmed target as a point estimate, not a floor, and flag that any shift in discount rate or earnings visibility could still lead to future model revisions.

What's in the News

From July 1, 2025 to September 30, 2025, Groupon reported no share repurchases, with 0 shares bought for US$0 million under its existing buyback authorization (Key Developments).
As of the end of that period, the company reported total repurchases of 17,280,113 shares, described as 60.82% of the buyback program, for US$55.17 million under the authorization announced on May 9, 2018 (Key Developments).
The disclosure confirms that the buyback program originally announced in 2018 has reached what the company describes as completed status at the reported share and dollar levels (Key Developments).

Valuation Changes

Fair Value: The fair value estimate remains at US$35.33, with no change between the prior and updated model.
Discount Rate: The discount rate has risen slightly, moving from 9.76% to 9.98%, which makes the model somewhat more conservative.
Revenue Growth: The revenue growth assumption is effectively unchanged, staying around 16.36% in both the prior and updated figures.
Net Profit Margin: The net profit margin input remains stable at roughly 16.04%, with only a very small rounding difference in the updated estimate.
Future P/E: The future P/E assumption has risen slightly from 16.02x to 16.12x, indicating a modestly higher valuation multiple in the updated model.

Overestimation of lasting revenue and user growth may overlook risks from changing consumer behaviors, competitive pressures, and uncertainties around AI-driven search benefits.
Reliance on cost optimization and platform enhancements could be undermined by persistent discount-focused branding, shifting privacy norms, and increased competition reducing future margins and retention.
Strategic AI integration, core category growth, and operational improvements enhance user engagement, scalability, and financial flexibility, positioning Groupon for sustained revenue and earnings expansion.

Catalysts

About Groupon

Operates a marketplace that connects consumers to merchants by offering goods and services at a discount in North America and international.What are the underlying business or industry changes driving this perspective?

Investors may be overestimating Groupon's future revenue growth by assuming AI-driven and organic traffic increases will lead to a sustained, material rise in transaction volumes, even though current gains are off a small base and the long-term impact of AI search and changes in consumer search behavior remains uncertain.
The market could be pricing in ongoing improvements in merchant partnerships and local category expansion without accounting for the risk that a continued consumer shift toward direct-to-merchant purchases and digital-first retail may limit customer engagement and gross billings over time, putting downward pressure on top-line growth.
Some investors may expect that enhanced platform capabilities and micro-category customization will drive higher user retention and lifetime value, potentially boosting net margins, but these benefits could be undermined if privacy regulations or increased preference for subscription models reduce the effectiveness of Groupon's personalized offers.
The valuation might reflect sustained margin expansion driven by recent cost optimization and product enhancements, overlooking the possibility that persistent brand association with deep discounting, and challenges in diversifying beyond the daily deals model, could constrain revenue growth and increase customer churn.
Enthusiasm about technology investments (such as integrating with AI partners and mobile app improvements) may not fully account for intensifying competition from social platforms, local merchant apps, and loyalty programs, which could erode market share and margin gains, ultimately limiting earnings growth.

Groupon Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Groupon's revenue will grow by 11.2% annually over the next 3 years.
Analysts assume that profit margins will increase from -1.8% today to 14.4% in 3 years time.
Analysts expect earnings to reach $96.3 million (and earnings per share of $2.54) by about August 2028, up from $-8.7 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 16.8x on those 2028 earnings, up from -170.7x today. This future PE is lower than the current PE for the US Multiline Retail industry at 17.6x.
Analysts expect the number of shares outstanding to grow by 1.72% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.8%, as per the Simply Wall St company report.

Groupon Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Accelerating AI-generated traffic and strategic platform enhancements position Groupon to capture a growing share of AI-driven commerce, enabling new customer acquisition channels and improved merchant reach, which can propel revenue growth and user engagement.
Robust recovery and expansion in the core local category-particularly with North America Local Billings up 20% and International Local growth of 15% year-over-year-demonstrate a strong operational turnaround and suggest scalability of the marketplace, supporting long-term revenue and earnings expansion.
Continual investment in marketplace transformation, product innovation (including mobile and personalization improvements), and granular micro-category management deliver more tailored merchant and user experiences, likely increasing customer lifetime value and optimizing net margins.
Improved merchant relationships, data-driven sales approaches, and evidence of higher voucher redemption rates drive repeat business and higher user retention, supporting more stable and recurring revenues for the platform.
Successful refinancing and simplification of the capital structure, combined with substantial available capital for share buybacks and disciplined M&A, enhance financial flexibility to invest in growth initiatives and return capital to shareholders, supporting long-term earnings and potentially boosting share price.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $30.0 for Groupon based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $47.0, and the most bearish reporting a price target of just $15.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $671.1 million, earnings will come to $96.3 million, and it would be trading on a PE ratio of 16.8x, assuming you use a discount rate of 8.8%.
Given the current share price of $36.89, the analyst price target of $30.0 is 23.0% lower. Despite analysts expecting the underlying buisness to improve, they seem to believe the market's expectations are too high.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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