Groupon offers great new deal on multiple perspectives

John Moe Aug 14, 2012

Groupon, the official shopping service of spa treatments, had a pretty good quarter by some standards. Sales were up 45 percent over this time last year and sales came in at 568.3 million bucks. Neat, huh? Not only that, the company was profitable for the first time. And how did Wall Street react to these numbers? Well, it’s down 23 percent right now. Yikes! What the–?
It seems that analysts were hoping for higher revenues, something more like $574 million. Six million dollars, it seems, can make a big difference. Just ask Lee Majors.
There was more to gripe about also.
From CNET:

What’s worse, the company’s gross billings growth decelerated to just 47 percent, and dropped quarter-over-year for the first time ever, Citi analyst Mark Mahaney said in a research note to investors today. Mahaney also noted that the company’s “core Daily Deal business is sharply slowing.”
“All in, a sequential decline implies a rapidly deteriorating core business i.e. the Daily Deals business, and Groupon needs to act fast to fill up this hole with new initiatives such as Goods,” Mahaney wrote. “Along similar lines, Groupon’s Billings Per Active Customer have been declining sequentially for the past 3 quarters. This is an inherently negative trend as it implies that the core value proposition to consumers has been declining.”

Strong words, if written a bit tediously. Sorry, Mahaney. Is group buying really just a fad? Is Groupon set up to be replaced by something newer and snazzier or is its space ready to be taken over by a Facebook or Google or something? Well, both those companies made a lot of noise when they entered the Deals space and then quietly slinked away from it.

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