Groupon Inc. GRPN raised the bar of its marketplace platform with the recent distribution partnership agreement with AMC Entertainment Holdings, Inc. AMC.
Leawood, KS-based AMC was founded in 1920. It is a subsidiary of China-based Dalian Wanda Group Co. Ltd. AMC is one of the largest global movie theater chains with around 661 theaters in the United States and approximately 365 theatres worldwide.
AMC’s strong presence in North America will aid Groupon to focus on expanding its presence primarily in the local markets. Notably, AMC’s ranking according to market share comes in first or second across 22 out of 25 largest metropolitan regions across the United States, comprising Los Angeles, Chicago and New York (that constitute top three markets).
With the partnership, Groupon marketplace intends to provide its customers with better access to movies by means of AMC’s multitude of screens and theaters across the United States. Both the companies look forward to work together over the long haul in order to capitalize on the market opportunities.
The integration of Groupon’s marketplace with AMC’s theaters is anticipated to commence “in the first half of 2019”.
Following the news, shares of Groupon and AMC were up 1.6% and 4.2%, respectively, yesterday. Notably, Groupon’s stock has declined 38.8% year to date, against the industry’s rally of 9.4%. The underperformance can be attributed to the transition to high-margined local services market, which is hurting revenues.
Initiatives to Expand Presence in North America Bode Well
Groupon is expected to boost its North America customer base considerably with the new alliance, in turn bolstering the top line. Additionally, the company has sold movie offers exceeding 6 million unitsacross North America, since 2016.
In fact, the company had approximately 31.4 million active customers based in North America compared with 32.2 million at the end of the previous quarter, as of Sep 30, 2018.
In a bid to strengthen local presence the company is exploring various experience-related alliances, comprising GolfNow, Universal Orlando, Peek, Viator, Tickets.com, Ingresso and CourseHorse, among others. These other experiences provide customers with entertainment options beyond the movies.
We may note that beyond recreation, Groupon’s partnership with Grubhub GRUB enables it to provide customers with accessto order food delivery from more than 80,000 restaurant partners of Grubhub via Groupon platform.
These initiatives are anticipated to revive the declining active customers count, consequently favoring growth prospects.
Zacks Rank & Key Pick
Groupon carries a Zacks Rank #3 (Hold).
TripAdvisor, Inc. TRIP is a better-ranked stock in the same industry, flaunting a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The expected long-term earnings growth rate for TripAdvisor is currently pegged at 14.1%.
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