Groupon has some recession-resistant characteristics that the market appears to be overlooking. Let’s look at why they could recover from the recent sell-off.

Wall Street likes Groupon Inc Common Stock (GRPN). Analysts on average rate the stock a Buy. The average price target is $49, implying that analysts expect the stock to rise 48.54% in the next year.

Groupon the king of daily deals has consumers looking for deals and deep discounts on merchandise and services which Groupon has to offer. Groupon has been able to maintain its entire active customer base in North America at about 15 million, largely due to local consumer growth. The number of completed transactions in North America increased by 1% annually and by 8% over the previous quarter, showing that local customers are making purchases more frequently.

The new plan, according to the Chicago-based e-commerce site (Nasdaq: GRPN), aims to “reduce our cost structure and fundamentally improve our marketplace experience to sustain long-term development.” CEO Kedar Deshpande said in a statement. “Our overall business performance is not at the levels we anticipated, and we are taking decisive actions to improve our trajectory.”

Groupon is reducing its North America sales teams to focus on “self-service merchant acquisition capabilities.” It is also re-organizing the company to focus “only on mission-critical activities and leaning on more external support.” “In addition, we are proposing to reduce cloud infrastructure and support functions as we wrap up cloud migrations.” Groupon is also closing its Australia Goods business, more than a decade after launching there in the first place. Groupon said that it will “rationalize” its real estate footprint to be more in line with hybrid work.

Local businesses benefit from Groupon’s discount vouchers and coupons. Customers visit Groupon to get their coupons. Customers benefit from discounts, and businesses benefit from increased customer traffic. Groupon earns money by charging merchants fees when their customers use their coupons.

In this sense, Groupon generates revenue by acting as a middleman, which is one of the oldest business models. The company generates revenue from both products and services in three categories: local, goods, and travel. Using a Groupon voucher, customers can get more than 50% off goods and services.

Groupon offers deep discounts on a wide range of products, including fashion and beauty items, vacation packages, spa services, and gift certificates to bars and restaurants. Though consumers can easily purchase the same products directly from the businesses that sell them, Groupon frequently offers prices that are significantly lower than retail. In essence, Groupon acts as a powerful advertising engine, generating sales and increasing brand recognition in exchange for a fee.

Though businesses receive less than they would normally charge for goods and services, Groupon serves as an advertiser with enormous reach, and merchants benefit by not having to pay for the advertisement upfront. Rather, they pay a percentage of revenue generated by the Groupon deal after the fact.

Damien Schmitz, Interim CFO of Groupon said, “We have made significant progress streamlining our tech platform and leaning into automation throughout our organization and, as a result, we believe we can take $150 million in annual costs out of our business by the end of 2023.”  “We’ll also be looking at other ways to reduce our costs and believe we can identify an additional $50 million in savings by the end of 2023. With a cost structure that is better aligned with the size of our current business and a disciplined operating philosophy, we believe we can generate meaningful and sustainable cash flow and create value for all of our stakeholders.”

Groupon’s stake in mobile payments company SumUp, could be a massive windfall   for the company perhaps exceeding Groupon’s current market value.

This is the reason why Prescience Point Capital Management predicts that Groupon share value should be in the  $70-$100 range, after Groupon confirmed its stake in SumUpon, on a bullish trend. This is an estimation and not financial advice.

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