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Groupon's 1Q17 in a 2Q17 Context

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Part 4
Groupon's 1Q17 in a 2Q17 Context PART 4 OF 6

Behind Groupon’s Stock Repurchase Program

Repurchase basket contains $169 million

Groupon (GRPN) repurchases a portion of its shares from time to time in an effort to balance growth investment and capital return. During 1Q17, the company spent an aggregate of $26.0 million to repurchase 7.3 million shares.

In the past four quarters of 1Q17, Groupon has returned $125.0 million to its shareholders by repurchasing shares. As of 1Q17, the company was left with $169.0 million in its stock repurchase budget.

Behind Groupon’s Stock Repurchase Program

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Factors determining repurchase

Groupon didn’t disclose how much it intends to spend on repurchases in the current quarter. But the management reiterated that the timing and size of any repurchase would be based on several factors, including market conditions and share prices.

Groupon stock has had a rough run in recent months, and a repurchase at the prevailing price may not benefit some investors—especially those who got into the stock recently. As of June 8, Groupon shares have fallen 23.5% since the company reported its 1Q17 earnings.

1Q17 report a mixed bag of fortunes

Groupon’s 1Q17 earnings report was a mixed bag. Revenue dropped nearly 4.0% from one year previously, falling short of the consensus estimate by more than $48.0 million. But Groupon’s bottom line improved tremendously, as its EPS (earnings per share) narrowed to -$0.04 from -$0.08 a year earlier. After adjusting for certain items, Groupon reported positive EPS of $0.01, topping the consensus estimate.

It’s worth nothing that, in the fight for market share against heavy hitters like Yelp (YELP), Amazon.com (AMZN), eBay (EBAY), and Wal-Mart Stores (WMT) in the crowded e-commerce space, stock repurchases are seen as vital in keeping investors on board.

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