Direct Marketing news

Africa

International


Subscribe to industry newsletters

Bizcommunity has over 400 industry contributors and we always welcome further contributions and contributors.
Advertise with us
Advertise & RatesMy Account
Company press officeList company
Recruitment packagesSubmit job ad
Download ratecard
Direct Marketing news

New lows for daily deals firm Groupon

12 Nov 2012 11:45
CHICAGO, UNITED STATES: Groupon shares plunged to their lowest level since the online deals giant went public a year ago, as analysts offered a harsh response to a disappointing earnings report
Groupon shares tumbled 29.3% to close at US$2.77 -- down some 85% from the public offering price in November 2011 of US$20.

Chicago-based Groupon on Thursday (8 November 2012) reported a loss of US$3m in results that came up shy of most analyst forecasts for a small profit.

Revenue increased 32% year-on-year to US$568.6m in the third quarter and was up 38% in constant currency.

But analysts said the company appeared to be stalling and that moves into new products and international markets were hurting.

Daniel Ernst at Hudson Square Research downgraded Groupon, saying "we believe the aggressive push into direct sales creates operational risks, lower margins and the potential for merchant partner conflict."

Sterne Agee's Arvind Bhatia said that Groupon's "international (segment) was particularly discouraging as it lost money in the quarter -- a meaningful reversal after reaching profitability earlier in the year."

"The company and the stock will likely remain in the 'prove to me' camp until trends reverse on a sustainable basis," Bhatia said in a note to clients.

Citi analyst Neil Doshi said Groupon's move into mobile commerce raised new questions.

"And this management team doesn't yet have an execution track record," Doshi said.

"In the meantime, the core daily deal business has almost slowed to a halt, and rapid mix-shift to direct revenue drastically changes the profitability profile of the model," he added.

"Until we see sustainable growth in core daily deal business coupled with an outlook for expanding core margins, we continue to pass on this deal."

Edward Woo of Ascendiant Capital Markets said in addition to slow growth and a weak outlook, Groupon faces a loss of top talent due to the collapse in share prices.

The decline "may make it harder for Groupon to retain staff as employees' stock option values have declined," Woo said. "We believe that staff turnover may increase the possibility for near-term business disruptions."

Groupon shares were listed on the Nasdaq last November in a blockbuster offering that raised a whopping US$700m and triggered fears that investors were overvaluing hot Internet startups.

The company, which rejected a US$6bn takeover offer from Google a year ago, has enjoyed phenomenal growth since its founding in 2008 but has been dogged by questions about its business model and accounting methods.

Groupon makes its money by selling members deals for discounts on activities, items or services and then splitting the money with the businesses involved. It recently has expanded into direct sales.

Source: AFP via I-Net Bridge


SOURCE

I-Net Bridge
For more than two decades, I-Net Bridge has been one of South Africa’s preferred electronic providers of innovative solutions, data of the highest calibre, reliable platforms and excellent supporting systems. Our products include workstations, web applications and data feeds packaged with in-depth news and powerful analytical tools empowering clients to make meaningful decisions.

We pride ourselves on our wide variety of in-house skills, encompassing multiple platforms and applications. These skills enable us to not only function as a first class facility, but also design, implement and support all our client needs at a level that confirms I-Net Bridge a leader in its field.
Go to: http://www.inet.co.za
    
 
LEGAL DISCLAIMER: This Message Board accepts no liability of legal consequences that arise from the Message Boards (e.g. defamation, slander, or other such crimes). All posted messages are the sole property of their respective authors. The maintainer does retain the right to remove any message posts for whatever reasons. People that post messages to this forum are not to libel/slander nor in any other way depict a company, entity, individual(s), or service in a false light; should they do so, the legal consequences are theirs alone. Bizcommunity.com will disclose authors' IP addresses to authorities if compelled to do so by a court of law.

News