Updated from 10:25 a.m. ET to add additional analyst comments in the sixth paragraph.
Groupon's third-quarter earnings report badly missed Wall Street consensus, as the daily deals segment of the business continued to struggle.
The company reported a loss of $3 million, or break even on a per-share basis, on $568.8 million in revenue. Analysts polled by Thomson Reuters were looking for earnings of 3 cents a share on $590.12 million in revenue. Revenue rose 32% year-over-year, but Wall Street was looking for more.The daily deals business is to blame, said Stifel Nicolaus analyst Jordan Rohan, but the company's saving grace, Groupon Goods, may help pivot the company as it tries to compete more with the likes of Amazon (AMZN) and other shopping sites. But Groupon hasn't done enough to earn investor confidence. "Right now, investors are not likely to give Groupon the benefit of the doubt. Accounting issues aside, investor trust in the core Groupon business model and management team is insufficient to take that leap of faith," Rohan wrote in his note. He noted that the company is pivoting from a high margin company with the daily deals to a lower margin e-commerce company. Rohan has a hold rating on the stock with no price target. In a press release, Chicago-based Groupon noted Groupon Goods is now doing $1.5 billion in global billings on an annual rate, and has done "nearly $500 million in revenues shortly after its one-year anniversary." JPMorgan analyst Doug Anmuth is positive on the Goods segment, saying growth "...has been impressive though it's coming at the expense of local deals and Goods have a lower operating margin profile relative to local deals." He rates Groupon at neutral. When Groupon began to really gain prominence during the recession in 2010 into 2011 prior to its initial public offering, investors were talking about this company in an extremely positive light. Google (GOOG) reportedly bid $6 billion for the company at the height of its popularity, only to be turned down. The company's market cap was $2.56 billion at the end of trading Thursday.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV