Why Groupon Shares Got Crushed

Updated

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 online deals company Groupon (NAS: GRPN) plummeted 28% today after its quarterly results and guidance missed Wall Street expectations once again.

So what: Groupon's disappointing third-quarter revenue -- $568.6 million versus the consensus of $590 million -- coupled with downbeat guidance for the current quarter reinforces serious concerns over the deteriorating "daily deal" market. The company cited continued weakness in Europe for the revenue shortfall, suggesting that management remains hard-pressed to find new areas of growth as its novelty rapidly wears off.


Now what: Management now sees fourth-quarter revenue of $625 million to $675 million, versus Wall Street's estimate of $635 million. "Internationally, fast growth and geographic expansion has led to execution issues," said co-founder and CEO Andrew Mason in a conference call. "To solve them, we will continue to apply the same playbook that is making the North American business successful. We know how to do it, and we're well under way." Given the undeniable economic, secular, and competitive headwinds working against Groupon, however, I'd be extremely cautious about biting on that bullishness.

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The article Why Groupon Shares Got Crushed originally appeared on Fool.com.

Fool contributor Brian Pacampara has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. 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 Motley Fool has a disclosure policy.

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