Groupon Shares Sank: What You Need to Know
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of "daily deal" specialist Groupon (NAS: GRPN) sank 11% Thursday after its quarterly results disappointed Wall Street.
So what: Groupon's fourth-quarter revenue nearly tripled, but lighter-than-expected billings of $1.25 billion -- up just 8% from the previous quarter -- suggests that its whopping growth may be slowing. Additionally, a big one-time tax bill and management's failure to disclose several key metrics (groupons sold, subscribers, repeat rates) are also fueling skepticism about Groupon's long-term potential.
Now what: Management now sees first-quarter revenue of $510 million-$550 million, versus the average analyst estimate of $501 million. "We will continue to invest in new services and tools that help our merchant partners be more successful and drive local commerce around the world," co-founder and CEO Andrew Mason said. Unfortunately, when you couple Groupon's still-lofty valuation with clear signs of a slowdown in the "daily deals" space, it's tough to put money on it.
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.
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