Groupon Inc (GRPN) Sees Explosion In Growth, But Will It Continue?

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Things could be looking up for Groupon Inc (NASDAQ:GRPN), according to analysts at Evercore. They’re picking up some stronger traffic trends for the company, especially since it launched the redesigned site in November.

Groupon grows faster than Amazon, eBay

Evercore analysts Ken Sena, Conor McDade and Andrew McNellis bumped their target price for Groupon Inc (NYSE:GRPN) from $9 to $10 per share and maintained their Equal-Weight rating on the company’s stock. They note that traffic on Groupon’s site improved during the December quarter as time spent re-accelerated to 90% growth year over year in November and 114% growth year over year in December. The company saw 50% growth in October, the month before it launched the redesigned site.

As you can see from the chart, the Evercore team notes that Groupon Inc (NASDAQ:GRPN)’s combined time spent jumped so much in the last two months of the year that the company outpaced both, Inc. (NASDAQ:AMZN) and eBay Inc (NASDAQ:EBAY) in terms of growth.

What they like about Groupon’s new efforts

One of the parts of the redesign was the incorporation of search engine optimization (SEO) into Groupon Inc (NASDAQ:GRPN)’s website, thus making it crawlable for search. In addition, the Evercore team notes that Groupon appears to be benefiting from a deeper integration with social platforms because of how quickly those platforms are growing.

They also said that while Groupon Inc (NASDAQ:GRPN) does still use some “pull” style deals on its desktop site, the company has refocused its mobile efforts. On mobile devices, they report that it is now easier to navigate Groupon’s site to find deals which are nearby. Groupon is now offering more real-time deals, many of which are on mobile devices. They also see comScore’s mobile tracking which shows a 131% year over year increase for December as a big positive for the company.

Groupon deals with other issues

Some have expressed concern about Google Inc (NASDAQ:GOOG)’s decision to shift to an index tabbing model, which puts emails into categories. The Evercore team notes that there does seem to be some pressure on open rates here, but they think that stronger than expected traffic, plus data which suggests that more and more mobile email usage is coming from OS clients without tabbing, is making this issue manageable.

The analysts continue to believe that the changes Groupon Inc (NASDAQ:GRPN) is making is moving the company in the right direction. However, they’re concerned about merchant conversion in the company’s SEO strategy, seeing it as problematic for merchants because search becomes a more expensive source of customer acquisition when they also have to pay Groupon as a middleman.

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