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Groupon’s First Public Quarter Is No Deal for Investors




We haven’t talked about Groupon in a while. There is actually a reason for that. Mostly it’s because when we post about the company our readers don’t seem to care. I have wondered why that is (maybe you can help enlighten me in the comments?) but this is somewhat significant to help us understand the state of the daily deal industry. So here we go.

According to USA Today

The online deals site, reporting for the first time as a public company, said its fourth-quarter revenue nearly tripled, but it lost money and its shares fell sharply after hours.

Groupon’s net loss totaled $42.7 million, or 8 cents per share, for the final three months of 2011. A year earlier, as a private company, it booked a larger loss of $378.6 million, or $1.08 per share.

The company said its adjusted loss was 2 cents per share in the latest quarter. On this basis, analysts were expecting a profit of 3 cents per share, according to FactSet.

So what can the poster child for CEO shenanigans, Andrew Mason, say to this kind of result? Oooops maybe?

The company actually generated more revenue than most analysts expected. Starting with that fact is usually a pretty good sign. So why did they end up losing 2 cents per share versus the expected 3 cents per share profit that analysts predicted?

Groupon said an unusually high international tax rate hurt the quarter’s adjusted results.

Huh? Did they not anticipate these taxes? Are they being taxed on an “As you go” basis? This is a weak excuse for weak performance. Investors agreed to some degree as the stock lost over 9% after the earnings were announced.

I know I have personally stopped the deluge of daily deal e-mails I was getting buried with via Living Social, Amazon Deals, Google Offers and Groupon. They all start to look the same. I suspect that the overload from these deal sites has caused me to miss some deals that would have worked for me. The way I look at it is that I am not spending extra money on things that would be extra for me. I have enough on my plate as is. It’s just likely that I am not the right target for sites like this.

Where are you with regard to the daily deal deluge? Are you getting the value you once did from Groupon and other deal sites? Is this a long term play that will be a viable business model (considering the scale issues) for the long term?

So we ask, what’s the deal?

  • http://blog.hubspot.com Corey Eridon

    The reason I don’t usually read Groupon content (on all sites!) is I just expect more bad news. If I saw a title that indicated some surprisingly good news — I’d click on it. But at this point I’m more than convinced of their faulty business model, you know? I want them and the businesses that use them to succeed, but it’s a bummer to read about one mistake after another.

    That being said, I still read this because I wanted to see the numbers :)

    • http://www.frankareed.com Frank Reed

      @Corey – That’s the inner blogger in you that won’t allow you to go past something without at least taking a peak. It’s like Internet rubbernecking. We can’t help it. It’s a sickness for sure. Thanks for pulling to the side of the road to take a look!

  • http://independentmarketing.org Sonny

    My dad who is 66 loves living social. I don’t like the deals since like you said, it’s extra money.

  • Cynthia Boris

    Too many deal emails. I unsubscribed from all but Moolala months ago. Mostly, the offers don’t suit me. I feel like they’re aimed at young, upwardly mobile, urban folks who have time on their hands, money to burn and feel like going out on a Saturday night.

    None of that would be me. LOL.