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Is Groupon Stock Overpriced, or a Deal?: StockTwits

Stocks in this article: GRPN COUP SALE

NEW YORK (TheStreet) -- Groupon  (GRPN) needs to spend too much money to make money. That was the verdict on StockTwits.com after the group discount site posted a smaller-than-expected loss on better-than-anticipated revenues, but fell short of expectations for second-quarter earnings.

$GRPN Missed on guidance estimates ? Alex K (@AKEB) May. 6 at 04:03 PM

Groupon management warned late Tuesday that the company intends to spend more on long-term expansion in the second quarter, cutting into earnings. Management guided to earnings per share of $0 to 2 cents, excluding some items. That fell short of the 3 cents analysts expected, according to consensus estimates published on Yahoo! Finance.

Groupon's revenue guidance of between $725 million and $775 million also failed to impress. The midpoint of that range, $740 million, missed analyst expectations of $754 million by a significant margin. The stock dropped 9% in after hours trading. Tuesday's close was at $6.72.

Groupon $GRPN drops 6%. Sales rise, but so do its losses ? Grok Trade (@GrokTrade) May. 6 at 09:13 PM

Earnings weren't all bad, however. In fact, the current quarter was pretty good, judging from Wall Street consensus estimates. The company reported an EPS loss of 1 cent, excluding non-recurring items such as acquisition-related costs and stock based compensation. That bested Wall Street's call for a 3 cent loss. Revenue of $757.6 million also topped estimates.

Groupon also raised its full year earnings outlook. The company now believes earnings will "exceed $300 million" this year. Last quarter management said full year earnings would be "slightly above" 2013's $286.7 million.

"We're on track with our plans in 2014 to invest in the growth of local, improve our goods margins, and drive profitability in our International operations," said Groupon CEO Eric Lefkofsky in a statement. "As a result, we have further confidence in our results for the back half of the year, and have increased our full year outlook."

Some investors said Groupon's results were bullish enough to bet on the stock rising Wednesday when more people are around to trade.

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