The number of consumers buying online goods and services in the United States (U.S.) hit a record high in 2020. According to some sources, between 75% and 80% of U.S. consumers bought products online. While companies like Amazon.com Inc. (NASDAQ: AMZN) and eBay Inc. (NASDAQ: EBAY) are well known, other companies such as Groupon Inc. (NASDAQ: GRPN) have become increasingly relevant in the e-commerce space. Are you thinking of how to buy stocks right now, or perhaps you want to invest in Groupon? This article provides a step-by-step guide on how to purchase the stock.
Groupon connects consumers and merchants, offering a variety of products and services at discounts via its online store. It offers consumers daily deals in the form of online vouchers from local merchants. Groupon also sells products directly to consumers. It generates revenue from the take rate on the purchase and use of vouchers (40% of total revenue) and from direct sales (60% of total revenue). More than 65% of Groupon's revenue comes from North America.
According to its 2020 annual report, Groupon 2020 revenue was $1.4 billion and gross profit was $677.3 million. It has over 4,000 employees. This article explains how to add Groupon Inc. stocks to your shopping cart and how market participants can participate in the retail sector.
How to Buy Groupon Inc. (NASDAQ: GRPN) Stock
Numerous e-commerce stocks list on stock exchanges in the U.S. However, in comparison to Amazon, eBay, Walmart Inc. (NYSE: WMT) and Etsy, Groupon is cheap and offers a wider variety of products. If you take the 52-week trading price average, you will find that Groupon’s share price hovers around $27, while Amazon, eBay and Etsy trade over $2,600, $56, and $140 respectively. For new investors who may not have a huge budget to invest, you may be looking for a cheaper alternative with solid fundamentals. Groupon not only provides solid fundamentals, but it has also differentiated itself from other e-commerce giants by selling a range of products and services at affordable prices. With this in mind, you may be thinking of buying Groupon stock. Here are simple steps you can take to buy Groupon stock from the best brokers.
Step 1: Pick a brokerage.
Buying stocks is easy, but you’ll want to do some research before taking the plunge. The easiest way to buy stocks is through an online broker. After opening your account, you can buy a wide range of stocks through the broker’s app in a matter of minutes.
It is easy to open and set up a brokerage account. You complete an application for your account and provide proof of identification and funding information. You transfer funds into your brokerage account electronically or by mailing a check.
Step 2: Decide how many shares you want.
You need not buy hundreds of shares all at once; over time, you can add additional shares and begin trading more of the same stock or any number of stocks you choose. You can also add more financial instruments as needed. New stock investors can consider fractional shares, a relatively new offering from online brokers that allows you to buy a portion of a stock rather than the full share. Fractional shares let you own expensive stocks like Amazon or Apple Inc. (NASDAQ: AAPL) that trade at $3,500 and $160 respectively.
What that means is you can get into pricey stocks — companies like Amazon that are known for their four-figure share prices — with a much smaller investment. SoFi Technologies Inc. (NASDAQ: SOFI), Robinhood Markets Inc. (NASDAQ: HOOD) and Charles Schwab Corp. (NYSE: SCHW) are among the brokers that offer fractional shares. However, Groupon is relatively cheap, so you could buy a few shares to begin with and increase your holdings based on how the stock performs in the market.
Step 3: Choose your order type.
Choose from two basic order types: market orders and limit orders.
With market orders, you purchase or sell stock at the current market price. Your order will probably be executed and filled quickly. Don't be surprised if the price you pay — or get if you're selling — isn't the same as the one you were given just seconds before. Throughout the day, bid and ask prices move continuously. That's why a market order is appropriate for buying stocks that don't have huge variations in price, such as large, stable blue-chip corporations rather than smaller, more volatile businesses.
You have more control over the price at which your trade is executed when you use a limit order. If the stock is trading at $100 per share, and you believe a price of $95 per share is in line with how you value the firm, your limit order instructs your broker to only execute your order when the price falls to that level. Remember, private companies in any sector are volatile, and you want to avoid major price fluctuations with a limit order.
Step 4: Execute your trade.
An executed trade occurs when a buy or sell order gets filled. The act of buying the share is what is referred to as executing your trade.
Where to Buy Groupon Stock
There are many online brokers, so you decide which broker is most suited to your needs. If you're an active trader aiming to beat the market, you probably already know what you're looking for in a brokerage: minimal fees, premium research, cutting-edge strategy tools and a robust trading platform. Below is a compilation of the best online brokers in a range of categories so you can pick one that meets your needs.
Groupon Stock History & Value
Groupon has held steady in the last year. At first glance, the stock has performed poorly but this trend is partially driven by restrictions linked to the COVID-19 pandemic. A significant portion of Groupon sales come from services ranging from travel, holidays and experiences. As such, COVID-19 held back the stock somewhat. Before the pandemic, the stock was trading between $33.60 and $21. However, in the last 52 weeks, it traded between $26.70 and $ 29.41 with a market cap of $788.671 million. As illustrated in the chart below, the share price is currently trading above the 50-day moving average of $23.22.
Low-interest rates in the U.S. caused a stock market rally, inciting concerns of a bubble. However, a good measure of the overvaluation of a stock is a comparison between its price to earnings (P/E) ratio and its share price. If a stock’s price is trading at 50 times its earnings, it is likely to be overvalued. By this measure, Groupon is not overvalued. Groupon's share price traded between $19 and $64.69 in the last 52 weeks. Its P/E ratio of $9.90 suggests that the stock is not overvalued.
Groupon: What Analysts Are Saying
While you may be interested in buying Groupon, it’s a good idea to look at what expert stock pickers and analysts think about the stock.
Trevor Young Bear Case
Barclays (NYSE: BCS) analyst Trevor Young lowered Groupon’s price target from $30 to $23 and kept an underweight rating on the stock. He cited that Groupon’s goods and travel categories may never recover and that the company is at the point when turnaround often fails.
Prescience Point Capital Management Bull Case
In December 2021, Prescience Point capital management described Groupon as significantly undervalued and pointed out its sizable investment in SumUp, a payment company, valuing the U.K.-based company at $22.6 billion.
Pros and Cons of Groupon
|Undervalued||Risk of lockdowns for sales|
|Recent stake in a U.K.-based payments start-up||Lack of customer loyalty with one-time users capturing deals|
|Sells a variety of goods and services||High competition|
|Present in over 17 countries||Weakness in goods and travel segment|
Is Groupon a Buy, Sell or Hold?
Groupon has performed relatively well despite being badly hit by COVID-19. While the stock has performed poorly over the last year, it has gotten a favorable rating from most industry professionals. Based on its business model, analyst ratings, earnings per share outperformance and recent investment in U.K.-based SumUp, it warrants a buy rating.
Frequently Asked Questions
Is Groupon a good stock to hold?
Groupon’s revenues fell in 2021, partly attributed to the COVID-19 pandemic. However, it has surprised analysts with strong earnings per share forecasts in the last four quarters. With favorable analyst ratings, Groupon could be a good stock to hold.
Does Groupon pay a dividend or have a Direct Stock Purchase Plan?
Groupon does not currently pay dividends on Class A shares and does not offer a Direct Stock Purchase Plan.