Groupon shares continue to slide
The stock hits an all-time low with earnings just around the corner.
The shares of e-commerce marketplace Groupon (GRPN) on Wednesday dropped to the lowest levels since going public in November. They are dropping another 5.5% in Thursday morning trading.
According to CNBC, trend-tracking site ComScore reported a 15% decline in traffic in June compared to the previous year. In the same month, Groupon had 12.25 million visitors, down 2.25 million from June last year.
On Wednesday, Groupon shares dropped 6.5%, closing at $7.77, well below the IPO price of $20 per share. According to DealBook, that closing price values Groupon at a little over $5 billion.
Back in May, Groupon had reported earnings far exceeding expectations, and the company was showing signs of growth.
CEO Andrew Mason said at the time that the company is using technology to better target deals at specific customers, resulting in better purchase rates and higher spending from Groupon's 37 million customers. Statistics suggest that deals within a five mile radius of a customer has a five times higher chance of resulting in a sale. Even in the Internet age, people seem to prefer to buy an item from a local seller. Of course, when the deal is for a restaurant or a massage, this makes total sense.
Analysts are concerned, however, that this "targeted" approach requires more deals on the Groupon system, which in turn will require more salesperson on staff. Mason doesn't see a problem with that, saying, "I think we'll see that increase. We'll be adding more front-line sales force."
However, these latest numbers have to be seen as a setback. The company is pointing out that June's numbers were up from February, March, April and May, but that fact has done little to appease the analysts.
As the Chicago Tribune points out, Citi analyst Mark Mahaney cut the price target to $19 from $22 on Tuesday, saying "European exposure in particular is an issue."
Investors have long been suspicious of Groupon, and it will be interesting to see how Wall Street reacts to the earnings when they are reported in August.
More from Benzinga
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Consumers are very status conscious in Asia, Africa and other emerging-market areas. This is especially true in China.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.