Groupon Inc (NASDAQ: GRPN)
Groupon was, at one point, looked at like it was the next big thing. However, recently, investor opinions have changed in a big way, especially over the past few trading sessions. After the company reported first quarter earnings on Thursday, we’ve seen nothing but downward trends on the stock. Today, we’ll talk about what we saw from earnings, what we’re seeing in the market today, and what we can expect to see from GRPN moving forward.
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GRPN Disappoints On Earnings
As mentioned above, Groupon provided its earnings report for the first quarter on Thursday. Unfortunately, the report wasn’t positive by any means. Here’s what we saw:
- Losses – During the first quarter, GRPN produced a loss of $49.1 million. This works out to be a loss of $0.08 per share. This loss was incredibly large as it represents a loss of four times what the company realized in the same quarter a year ago.
- Revenue – In terms of revenue, Groupon generated $732 million. While this came well ahead of analysts’ modest expectations of $708 million, the number came in well below the $750 million we saw in the same quarter one year ago.
- Guidance – Unfortunately, guidance is what really concerned GRPN investors. The company said that in the year 2016, it’s expecting to generate sales in the range between $2.75 billion and $3.05 million. This figure fell well short of the average estimate of $3.01 billion for the year.
What We’re Seeing From GRPN Today
Following big losses, we tend to see some kind of recovery, even if it is a small one. However, in this particular case, investors are clearly upset with GRPN as the stock has been realizing declines since the report was released. Unfortunately, those declines are continuing today. Currently (10:04), the stock is trading at $3.41 per share after a loss of $0.21 per share or 5.77% thus far today.
What We Can Expect To See Moving Forward
Moving forward, I have an overwhelmingly bearish opinion of what we can expect to see from GRPN. At this point, it seems as though consumers have spoken, and they are not too interested in what the website has to offer. Unfortunately for Groupon, the company is stuck in a rut where it is forced to continue spending massive amounts of money to bring users to its website. The reality is that these investments simply aren’t paying off. At this point, I don’t have much hope for continued growth in sales nor the company’s ability to recover. There is, however, a silver lining to the dark cloud. Alibaba recently made a rather large investment in the company. This investment signals the potential for an acquisition from Alibaba. While GRPN doesn’t have much to offer investors on its own, it does have quite a bit to offer to Alibaba while it continues to work to maintain its leadership role in the Chinese online retail space. The technology at Groupon is of high value to Alibaba. However, I never bank on acquisitions, and if an acquisition doesn’t happen, we can expect to see further declines on GRPN.
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What Do You Think?
Where do you think GRPN is headed moving forward and why? Let us know your opinion in the comments below!
[Image Courtesy of Flickr]