Groupon plunges on disappointing earnings

Will the deal site, which rejected a bid from Google in 2010, ever get its act together?

By Jonathan Berr Nov 9, 2012 1:23PM
Image, Couple ordering meal in restaurant copyright NULL, CorbisWhen he rejected a $6 billion buyout offer from Google (GOOG) in 2010, Groupon (GRPN) CEO Andrew Mason made the bizarre statement in a CNN interview that he didn't want to sell to the search engine giant because "I want to be part of GE or something like that."  It's too bad that Mason didn't take Google's money and run.

The Chicago company, which Thursday reported worse-than-expected results, now has a market value of $1.97 billion. Its shares have plunged more than 85% this year, and are down more than 27% Friday. 

Investors have begun to wonder whether Groupon, which recently had its one-year anniversary as a public company, and its loquacious CEO will ever be able to get their act together.

Groupon reported a net loss of $2.98 million, or 0 cents, an improvement over a loss of $54.2 million, or 18 cents a year earlier. Revenue rose more than 32% to $568.6 million. The company was expected to earn 4 cents on sales of $633.9 million. Much of the shortfall seems to have come from overseas, where there have been "execution issues," according to Mason.

"Some people have expected a quick turnaround in Europe," said Sameet Sinha, an analyst with B. Riley, in an interview with Bloomberg News. "What they don't understand is it's a huge task."


Groupon Goods, an e-commerce site, has reached $500 million in revenue. While growing at a faster rate than the deals business site, it has lower profit margins. The deals business has its own problems. Advertisers are complaining that partnering with Groupon costs them money and does little to promote their brands. Their skepticism will continue.


Fourth-quarter revenue is expected to be between $625 million and $675 million. Wall Street, though, still has faith in Groupon. The average 52-week price target on the stock is $7.19, more than 150% above where it currently trades. 


Unfortunately, it seems unlikely that Groupon will breach the huge gap between its reality and Wall Street's lofty expectations.


Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter@jdberr.

Tags: GOOGGRPN
2Comments
Nov 9, 2012 4:00PM
avatar
If Groupon does not stop bugging me with spam adds 10 times a day for stuff I would never be interested in, I will be uninstalling the mobile app and blocking their emails!
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

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.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

113
113 rated 1
279
279 rated 2
416
416 rated 3
647
647 rated 4
548
548 rated 5
513
513 rated 6
669
669 rated 7
516
516 rated 8
317
317 rated 9
113
113 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
KOGKODIAK OIL & GAS Corp10
UPLULTRA PETROLEUM Corp10
TAT&T Inc9
COPCONOCOPHILLIPS9
DVNDEVON ENERGY CORPORATION9
More

VIDEO ON MSN MONEY

ABOUT

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.