We Might See A Profit From Groupon, Inc. (NASDAQ:GRPN) Soon

With the business potentially at an important milestone, we thought we'd take a closer look at Groupon, Inc.'s (NASDAQ:GRPN) future prospects. Groupon, Inc., together with its subsidiaries, operates a marketplace that connects consumers to merchants. On 31 December 2024, the US$591m market-cap company posted a loss of US$59m for its most recent financial year. Many investors are wondering about the rate at which Groupon will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Groupon

Consensus from 3 of the American Multiline Retail analysts is that Groupon is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of US$3.6m in 2025. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 118%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Groupon given that this is a high-level summary, though, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Groupon is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Groupon which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Groupon, take a look at Groupon's company page on Simply Wall St. We've also put together a list of essential factors you should look at:

1. Valuation: What is Groupon worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Groupon is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Groupon’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.