Smart Investors Avoid Groupon No Matter How Good the Price

At first glance, digital coupon service Groupon (NASDAQ: GRPN) might look like a good investment today. The stock is down 18% over the last three months, including a 10% drop in May. Shares are changing hands at the bargain-bin valuation of 14.4 times forward earnings or 1.1 times trailing sales. At the same time, Groupon's bottom line swung to a modest profit in last month's first-quarter report. That must be a setup for a solid rebound, right?

Unfortunately, it's not that simple. You shouldn't fall into Groupon's value trap. Let me show you what I mean.

Like every other company, Groupon is wrestling with the fallout from the COVID-19 pandemic and navigating the return to normal market conditions. The global health crisis has certainly not been kind to this company, whose business model depends on putting consumers together with retailers and local experiences. Lockdowns and social distancing policies are painful for Groupon.

Source Fool.com