Volatile Stock to Watch: Groupon Inc Common Stock (NASDAQ: GRPN)

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Groupon Inc Common Stock (NASDAQ: GRPN) stock plunged 12.07% on September 14th, 2020 (Source: Google finance) after the company provided an update about its business on Friday on its transition to a new model in North America. Groupon had previously announced the move when it reported second-quarter results last month. As per the update, the company is changing up how it handles business. That includes shifting away from a primary seller to instead hosting third-party sellers on its website. This change has been in the works for some time now. With the changes to its business, GRPN notes that there will be differences in how it reports earnings. For example, the company will no longer list gross revenue and is instead switching over to net revenue. The company is currently expecting to be mostly done with the process by the end of its third quarter of 2020. The company has already exited its warehouse operations, which will significantly reduce its cost structure. As a result of the changes, Groupon expects consolidated goods revenue in the third quarter to be approximately $155 million. The consensus estimate currently calls for $187 million in goods revenue. GRPN has also noted that the company will begin to transition its international goods business to the same third-party marketplace model starting in the fourth quarter.

On the other hand, for the second quarter of 2020, the company has reported revenue of $395.6 million in the second quarter 2020, down 26% (25% FX-neutral) compared with the second quarter 2019. The company delivered the gross profit of $137.2 million in the second quarter 2020, down 53% (53% FX-neutral) compared to the second quarter 2019. Global units sold had fallen down 35% to 23 million in the second quarter 2020 mainly due to the impact of COVID-19 on demand. In the second quarter 2020, North America units were down 64% in Local and up 31% in Goods. International units were down 72% in Local and up 44% in Goods. Cash and cash equivalents as of June 30, 2020 were $784.7 million. As of June 30, 2020, the company had $200.0 million of outstanding borrowings under the revolving credit facility.

In addition, for 2020, the company anticipates to realize approximately $140 million in savings from the combination of the multi-phase restructuring actions and furloughs. For 2021, the company anticipates to realize approximately $200 million in savings from the restructuring actions

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