This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

All You Ever Wanted to Know About Groupon

111%, 72%, 33%, 10%: Groupon's sequential revenue growth over the past three quarters. See a pattern here?

95%, 75%, 46%, 28%: Groupon's sequential customer growth over the past four quarters. See a pattern here?

137%, 64%, 39%, 24% Groupon's sequential subscriber growth over the past four quarters. You get the picture.

$215 million, $207 million, $190 million: Groupon's marketing expenditures over the past three quarters. (See chart below.)

A drop in marketing spending has given way to lower growth in subscribers, customers and revenue. Can Groupon maintain lofty growth rates without spending so frivolously on customer acquisitions? I doubt it.

Just take a look at what CEO Andrew Mason told employees in a rant a few months back: "We are spending a ton now because we're acquiring as many subscribers as we can as quickly as we can. We aren't paying attention to marketing budget (just marketing ROI) in the way a normal company would, because we know that even if we wanted to continue to spend at these levels, we would eventually run out of new subscribers to acquire.

"We view this internally as a very large one-time expense, and then our job forever after will be to continually convert these subscribers into customers and to make sure our customers keep buying from us."

>>11 Stocks to Play the Groupon IPO

Given the drop in margins for Groupon and the decreasing rate of revenue per subscriber (deal fatigue?), Groupon could have its work cut out in achieving profitability. Sure, once the marketing expenses tail off, expenses will retract, leading to the higher probability of turning a profit. But the question remains: Is Groupon just a flash in the pan, or a real business that can grow organically without the haphazard marketing expenses that have propped up the company's key statistics?

That's the end of the numbers. Here's the commentary:

If you haven't heard, Groupon is being called by some as the biggest sham to ever hit the IPO market. Some have even said Groupon is "technically insolvent," or that the underlying business is built on "complex financial instruments."

Let me be clear, I'm not a Groupon supporter, yet I think the media has been too quick to bash the company. In an article from June, I even spoke of how I felt the Groupon business model was flawed, citing the negative effects that a deal can have on a small business.
2 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $117.34 -0.81%
FB $107.12 2.76%
GOOG $767.04 3.29%
TSLA $237.19 3.01%
YHOO $33.71 -0.30%


Chart of I:DJI
DOW 17,888.35 +168.43 0.95%
S&P 500 2,102.63 +22.22 1.07%
NASDAQ 5,156.3060 +47.64 0.93%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs