Is Groupon's Wall Street Wallop The Start of Its Comeback?
Despite the recent jubilation on Wall Street as major averages soar and approach all-time closing highs, Groupon has been spared from the general optimism that has returned to the markets. Last night Groupon was a whipping post for Wall Street following the confirmation of larger-than-expected fourth-quarter losses. Coupled with a weaker-than-expected revenue outlook, shares of the daily deal giant plummeted more than 25 percent in after-hours trading.
All told, Groupon booked a loss of $81.1 million, or 12 cents a share, in the fourth quarter of 2012. Analysts expected a loss of just 2 cents a share. Revenue, meanwhile, only climbed to $638.3 million vs. analyst calls for $639.8 million.
As a result, shares of Groupon fell hard and fast. So intense was the selloff that some analysts actually expected a small bounce Thursday. But so far today, the downward momentum continues with Groupon now trading 75% lower than its $20 opening price in November of 2011.
While the earnings, forecast, and underlying poor health of the daily deals space may once again lead to pressure on current Chief Executive Office and co-founder Andrew Mason to act or resign, the Groupon CEO's isn't, by any means, the root of Groupon's problem. The biggest threat facing the daily deals space today is the lagging speed at which retailers are embracing the tools and technologies Groupon and others in the business need to curtail this industry’s dramatic free-fall.
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Since peaking in popularity a few short years ago, the daily deals industry has been relentless in pumping out mobile coupon clutter, the end result of which is severe coupon fatigue among consumers. While lingering economic uncertainty is still perpetuating widespread consumer thriftiness, daily deals alone are no longer as "cool" as they used to be. What is still very much in vogue, however, are the platforms and technologies that enable consumers to receive relevant targeted promotions and discount shopping opportunities that can be easily stored and retrieved at the point of sale for redemption in a seamless process.