Critical Review: Groupon (NASDAQ:GRPN) and Newegg Commerce (NASDAQ:NEGG)

Newegg Commerce (NASDAQ:NEGG) and Groupon (NASDAQ:GRPN) are both small-cap retail/wholesale companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, valuation, risk, analyst recommendations, earnings, dividends and institutional ownership.

Volatility & Risk

Newegg Commerce has a beta of 4.19, suggesting that its share price is 319% more volatile than the S&P 500. Comparatively, Groupon has a beta of -0.02, suggesting that its share price is 102% less volatile than the S&P 500.

Profitability

This table compares Newegg Commerce and Groupon’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Newegg Commerce	N/A	N/A	N/A
Groupon	-16.76%	-717.37%	-13.09%

Analyst Recommendations

This is a summary of current recommendations for Newegg Commerce and Groupon, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Newegg Commerce	1	0	0	0	1.00
Groupon	2	1	2	0	2.00

Groupon has a consensus price target of $33.67, suggesting a potential upside of 206.90%. Given Groupon’s stronger consensus rating and higher probable upside, analysts clearly believe Groupon is more favorable than Newegg Commerce.

Earnings and Valuation

This table compares Newegg Commerce and Groupon”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Newegg Commerce	$1.24 million	1,158.38	-$43.33 million	N/A	N/A
Groupon	$498.42 million	0.90	-$83.52 million	($2.12)	-5.17

Newegg Commerce has higher earnings, but lower revenue than Groupon.

Institutional & Insider Ownership

0.5% of Newegg Commerce shares are held by institutional investors. Comparatively, 90.1% of Groupon shares are held by institutional investors. 22.9% of Newegg Commerce shares are held by insiders. Comparatively, 35.7% of Groupon shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

About Newegg Commerce

Newegg Commerce, Inc. operates as an electronics-focused e-retailer in North America. The company offers desktops, laptops, gaming laptops, peripherals, and accessories; CPU/processors, graphic cards, motherboards, storage devices, and computer accessories; home video and audio, headphones, pro audio/video, cellphones, wearables, and digital cameras; display and printing, office technology furniture, office supplies, and mailing and inventory supplies; and software, digital downloads, warranty and services, 3rd party gift cards, and entertainment products. It also provides Xbox, PlayStation, home networking, server and components, smart home products, car electronics, motorcycles and ATV, wheels and tires, home improvement tools, home appliances, kitchen utensils, outdoor and garden furniture, fitness, and sports and health products. The company operates B2C platforms, including Newegg.com, Newegg.ca, and Newegg Global, as well as mobile apps; and B2B platforms comprising NeweggBusiness.com. The company was founded in 2001 and is headquartered in City of Industry, California. Newegg Commerce, Inc. is a subsidiary of Hangzhou Liaison Interactive Information Technology Co., Ltd.

About Groupon

Groupon, Inc., together with its subsidiaries, operates a marketplace that connects consumers to merchants. It operates in two segments, North America and International. The company sells goods or services on behalf of third-party merchants. It serves customers through its mobile applications and websites. The company was formerly known as ThePoint.com, Inc. and changed its name to Groupon, Inc. in October 2008. Groupon, Inc. was incorporated in 2008 and is headquartered in Chicago, Illinois.