Groupon's New Elite Deal Series - Analyst Blog

Daily deals provider Groupon GRPN recently launched its newest line of deals known as the Elite Deal Series. The Groupon Elite Deal Series is an ongoing collection of luxury items, primarily featuring premium-plus pricing. Following the announcement, Groupon's share went up 3.83% to close at $8.14 on Apr 1, 2014.

The series was launched with its first deal of $40 for $20 worth of Groupon Bucks. Purchasers will receive $20 in Groupon Bucks for buying any deal amounting to the premium-plus price of $40. This deal will be available only for a limited period though the Bucks will remain valid for further use on Groupon.com.

Groupon Bucks are a type of site credit, redeemable only against future Groupon purchases excluding Getaways Market Pick hotels. In order to become eligible to redeem Groupon Bucks, one must maintain a Groupon customer account with a valid credit card.

For the last five years, the company had made luxury items such as diamond rings, full wedding packages at a luxury hotel and high-end designer handbags available to its customers at huge discounts. Now, with this deal, elite customers will be provided with the status and sophistication of paying premium-plus prices.

The new launch reflects Groupon's strategy of diversifying its business in addition to the core daily deals segment to drive growth and profitability, going forward.

We believe Groupon is well positioned to gain from rising e-commerce spending on mobile devices, a profitable domestic market and an expanding international market. Moreover, the acquisition of Ticketmonster will solidify its competitive position going forward.

Although Groupon has strong growth prospects yet increasing competition from more established players such as eBay EBAY, Amazon AMZN and Google GOOG remains a major concern going forward. Moreover, continued investments to expand its merchant base are expected to impact near-term profitability.

Currently, Groupon has a Zacks Rank #5 (Strong Sell).