This Day On The Street
Continue to site
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

Groupon: Dead as You Know It (Update 2)

Updated from 10:25 a.m. ET to add additional analyst comments in the sixth paragraph.

NEW YORK ( TheStreet) -- The Groupon (GRPN - Get Report) you know is dead. If the company's goods segment can't save it, perhaps nothing will.

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 - Get Report) 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 - Get Report) 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.

1 of 2

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
Submit an article to us!
SYM TRADE IT LAST %CHG
AMZN $421.19 -0.44%
GOOG $530.80 -1.85%
GRPN $6.84 -2.84%
AAPL $125.80 -2.25%
FB $77.56 -1.59%

Markets

DOW 17,928.20 -142.20 -0.79%
S&P 500 2,089.46 -25.03 -1.18%
NASDAQ 4,939.3270 -77.6020 -1.55%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs