This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
TheStreet Open House

Groupon's Impending Death Is Greatly Exaggerated

Stocks in this article: GRPN AMZN GOOG

NEW YORK ( TheStreet) -- Much has been made about the problems that have plagued Groupon (GRPN - Get Report), which reports second-quarter earnings after the stock closes today.

Growth expectations have fallen sharply, thanks, in part, to a slowing global economy.

Groupon was able to deliver better-than-expected first-quarter earnings, driven by strong international growth. Still, Hudson Square's Dan Ernst expects that to have changed in the second quarter.

Ernst says sluggish economic growth in the U.S. and the debt crisis in Europe hurt Groupon's earnings. He also noted a rising dollar as a disadvantage. As a result, he reduced his earnings estimates for the rest of 2012 and 2013. He rates Groupon shares "buy," but cut his price target to $12 from $19.

International revenue doubled in the first quarter, as the brand resonated with consumers across the globe. However, U.S. growth may be slowing based on recent trends.

Raymond James analyst Aaron Kessler analyzed Google search trends and noted that worldwide searches for 'Groupon' have declined sharply year over year. Searches rose 21% in the second quarter, compared with 65% in the first quarter. He also noted that U.S. searches ticked down, slowing from 22% in the first quarter to 15% in the second. Kessler also noted that Yipit, a daily deal aggregator, showed Groupon billings fell 3% sequentially through May in the second quarter. He rates the shares "market perform."

Analysts polled by Thomson Reuters expect the the Chicago-based daily deals company to post earnings of 3 cents per share on $573.13 million in revenue.

Not all is lost for Groupon, which competes with Living Social, Amazon (AMZN - Get Report) and Google (GOOG).

JPMorgan analyst Doug Anmuth says Groupon "is well-positioned to take share of the total leisure, recreation and food-service markets," which total $5.3 trillion in sales globally and $1.4 trillion in the U.S., he says.

Anmuth notes that as subscriber growth slows, profitability will move substantially higher over the next two years. Still, he's concerned about a weakening global economy. Anmuth rates the shares "neutral" with a $22 price target.

While Groupon has had its share of issues, it doesn't appear the company is going away anytime soon. Mark Twain may have said it best. "The reports of my death are greatly exaggerated."

Interested in more on Groupon? See TheStreet Ratings' report card for this stock.

Follow TheStreet Tech on your wireless devices.

-- Written by Chris Ciaccia in New York

>Contact by Email.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link 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

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, 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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs