Ana Sarda Rodrigues @nintingale: "$GRPN 𝗕𝗲𝘀𝘁 𝗗𝗲𝗮𝗹..."

Germany

$GRPN (Groupon Inc) 𝗕𝗲𝘀𝘁 𝗗𝗲𝗮𝗹 𝗶𝗻 𝘁𝗵𝗲 𝗨𝗦 𝗦𝘁𝗼𝗰𝗸 𝗠𝗮𝗿𝗸𝗲𝘁 𝗥𝗶𝗴𝗵𝘁 𝗡𝗼𝘄? Groupon is my biggest position — about 𝟲% 𝗼𝗳 𝘁𝗵𝗲 𝗯𝗼𝗼𝗸, and I'd happily own more. I think it's the most undervalued name in the US market today. 𝗧𝗵𝗲 𝘀𝗲𝘁𝘂𝗽 The market's pricing this like it's about to go bust. It's not — cash flow just turned positive. That gap, between the price and the business, is the whole opportunity. 𝗪𝗵𝗮𝘁 𝘆𝗼𝘂'𝗿𝗲 𝗯𝘂𝘆𝗶𝗻𝗴 • 𝗠𝗮𝗿𝗸𝗲𝘁 𝗰𝗮𝗽: ~$700M (across ~36.8M shares) • 𝗖𝗮𝘀𝗵: $215M • 𝗦𝘂𝗺𝗨𝗽 𝘀𝘁𝗮𝗸𝗲: $179M • 𝗗𝗲𝗯𝘁: $324M in low-rate convertible notes Cash plus the SumUp stake is nearly $400M backing a $700M company — before the business does a thing. You're getting the operating company for almost nothing. 𝗧𝗵𝗲 𝗵𝗶𝗱𝗱𝗲𝗻 𝗲𝗻𝗴𝗶𝗻𝗲 Groupon serves 𝟭𝟲 𝗺𝗶𝗹𝗹𝗶𝗼𝗻 𝗰𝘂𝘀𝘁𝗼𝗺𝗲𝗿𝘀 at a 𝟵𝟬% 𝗴𝗿𝗼𝘀𝘀 𝗺𝗮𝗿𝗴𝗶𝗻 — nine of every ten revenue dollars heads toward profit. The catch: each one only buys about 𝟮.𝟯 𝘁𝗶𝗺𝗲𝘀 𝗮 𝘆𝗲𝗮𝗿, on a platform frozen for a decade. For comparison, Ibotta's users redeem more than once a month and food-delivery users order dozens of times a year. Getting Groupon to even ~4 buys a year is a conservative bar, not a stretch. That's the whole growth story, and it needs nothing newly invented. 𝗪𝗵𝘆 𝗶𝘁'𝘀 𝗵𝗮𝗿𝗱 𝘁𝗼 𝗸𝗶𝗹𝗹 • 𝗖𝗵𝗲𝗮𝗽 𝘁𝗼 𝗿𝘂𝗻. Light cost base, fat margins. Extra revenue mostly drops to the bottom line. • 𝗡𝗼 𝗿𝗲𝗮𝗹 𝗿𝗶𝘃𝗮𝗹. The local-deals market is about as fragmented as it gets — tiny coupon sites, one-off apps, none with Groupon's reach or merchant network. That's an open lane, and Groupon's the only one big enough to roll it up. • 𝗥𝗲𝗰𝗲𝘀𝘀𝗶𝗼𝗻-𝗽𝗿𝗼𝗼𝗳. When money's tight, people hunt deals. Downturns send 𝘮𝘰𝘳𝘦 customers its way. 𝗔𝗜 𝗶𝘀 𝗮 𝘁𝗮𝗶𝗹𝘄𝗶𝗻𝗱, 𝗻𝗼𝘁 𝗮 𝘁𝗵𝗿𝗲𝗮𝘁 For most tech, AI is a threat. Here it's fuel — and management's already moving. Their efficiency program, 𝗣𝗿𝗼𝗷𝗲𝗰𝘁 𝗙𝗼𝘂𝗻𝗱𝗿𝘆, pairs a 15% headcount cut with AI upgrades to the offer pipeline, confirmed on the latest call. Sharper personalization and timing are exactly the levers that lift how often people buy. And there's almost no 𝘥𝘰𝘸𝘯𝘴𝘪𝘥𝘦 AI risk — nobody's going to "AI away" a network of local merchants and 16 million deal-hunters. 𝗧𝗵𝗲 𝗺𝗮𝘁𝗵 (𝘁𝗵𝗲 𝘀𝗶𝗺𝗽𝗹𝗲 𝗽𝗮𝗿𝘁) • $𝟳𝟱𝗠 base EBITDA (2026, per the Q1 release) • +$𝟰𝟬𝗠 from Project Foundry → ~$115M • +$𝟭𝟬𝟬𝗠 lifting frequency 2.3 → 3.3 → ~$215M • +$𝟭𝟬𝟬𝗠 pushing toward 4.3, still below peers → ~$𝟯𝟭𝟱𝗠 𝗿𝘂𝗻-𝗿𝗮𝘁𝗲 (optional case, not our baseline!) Consumer-internet peers trade mid-teens to low-20s on EBITDA (eBay ~16–17x, DoorDash 20x+, Ibotta higher). I use a conservative 𝟭𝟱𝘅 — which points north of $100 for the optional bull case. I'm not underwriting that. My targets are deliberate checkpoints: • $𝟯𝟱 — about 150% above our $14 entry (no improvements, only re-rate of EBITDA at similar peers) • $𝟳𝟬 — about 400% above (customers buy from 2.3 to 3.3x per year) 𝗧𝗵𝗲 𝗸𝗶𝗰𝗸𝗲𝗿: 𝗮𝗴𝗴𝗿𝗲𝘀𝘀𝗶𝘃𝗲 𝗯𝘂𝘆𝗯𝗮𝗰𝗸𝘀 Management has ~$𝟱𝟳𝟬𝗠 to buy back stock over 2026–2027 (cash, SumUp sales, free cash flow). The beauty: 𝘵𝘩𝘦 𝘭𝘰𝘸𝘦𝘳 𝘵𝘩𝘦 𝘴𝘵𝘰𝘤𝘬, 𝘵𝘩𝘦 𝘮𝘰𝘳𝘦 𝘵𝘩𝘦𝘺 𝘳𝘦𝘵𝘪𝘳𝘦. At today's price that's roughly half the share count gone — fewer shares, bigger slice of rising profits. Two more: 𝟭𝟳% 𝗼𝗳 𝘁𝗵𝗲 𝗳𝗹𝗼𝗮𝘁 𝗶𝘀 𝘀𝗵𝗼𝗿𝘁 — climb instead of fall and that unwinds into buying. And the stock just closed above its 𝟮𝟬𝟬-𝗱𝗮𝘆 𝗮𝘃𝗲𝗿𝗮𝗴𝗲. 𝗕𝗼𝘁𝘁𝗼𝗺 𝗹𝗶𝗻𝗲 A ~$700M company sitting on ~$400M of cash and SumUp, running 90% margins, no real rival, a tailwind from recessions 𝘢𝘯𝘥 AI — while management shreds the share count and shorts sit right on top. Conservatively I see $𝟯𝟱 (about 150%), then $𝟳𝟬 (about 400%) over 2–3 years. Full earnings power points well past $100; I'm just not asking you to pay for that yet. Setups this lopsided are rare. $35 first, then $70. Ps: this Idea is inspired by Nick Nemeth on Substack. I verified the thesis, filled the gaps, and double-checked the numbers myself.

Not investment advice. The author may have financial interests in the mentioned instruments.

GRPN

Groupon Inc

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GRPN

Groupon Inc

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