Groupon (GRPN) Zooms 42% on Earnings

by Knowledge Resources | 05/19/2025, 23:22

Groupon provides an e-commerce platform that connects customers with local businesses offering discounted deals. Some of their partners might include local merchants such as restaurants, gyms, and event organizers.
The company earns a percentage of each deal sold, typically in the range of 30%-50% of the deal’s value. Merchants can also pay for enhanced visibility through sponsored placements on the company’s website and targeted marketing campaigns.
Shares zoomed 42% on May 8th after closing at $24.21, up $7.23, from the May 7th close at $16.98. On March 12th, shares skyrocketed 43% after earnings to close at $13.98, up $4.21, from the previous session close at $9.77.

Shares of Groupon (GRPN) recently broke out to a fresh 52-week high of $26.90 following an earnings beat on both the top and bottom lines. The company reported a profit of 17 cents a share versus forecasts for a loss of 12 cents. Revenue of $117 million also cleared forecasts for a print of $115 million.

In the previous quarter, the company reported a loss of $1.20 a share while estimates were for a loss of four cents. Revenue of $130 million was 2% higher than expectations for $127.7 million.

Groupon provides an e-commerce platform that connects customers with local businesses offering discounted deals. Some of their partners might include local merchants such as restaurants, gyms, and event organizers.

They emphasize a pay-for-performance business model, meaning the merchant only incurs a cost when a sale is made through the platform. Groupon’s revenue is mainly derived from commissions, advertising services, and subscription programs.

The company earns a percentage of each deal sold, typically in the range of 30%-50% of the deal’s value. Merchants can also pay for enhanced visibility through sponsored placements on the company’s website and targeted marketing campaigns.

Shares zoomed 42% on May 8th after closing at $24.21, up $7.23, from the May 7th close at $16.98. On March 12th, shares skyrocketed 43% after earnings to close at $13.98, up $4.21, from the previous session close at $9.77. Back in November, the stock fell 27% despite an earnings beat as revenue missed forecasts.

A mini trading range has formed between $25-$27 since the earnings announcement. There is gap down potential to $20 if shares fall below $24. Continued closes above $26.50 could lead to another breakout with upside to $31 and resistance from January 2022.

Two days ahead of earnings, there was some unusual options activity in the GRPN June 22 (weekly) calls that expire on June 6th, 2025. Volume on May 5th came in at 5,000 for the session with the stock at $16.78. Open interest at the time was only one contract. This suggested traders, or maybe one trader, expected a massive move in the stock. History also showed the possibility was there for an explosive breakout, or breakdown.

These calls options closed at 45 cents on May 5th. After the 42% pop in the stock, these calls were trading at $4.40 on the May 13th close. The return was an astronomical 878%.

We will keep Groupon on our Watch List for another trading opportunity as another massive could be coming.