Yesterday may have been a nerve-wrecking experience for Groupon, Inc. (NASDAQ:GRPN) shareholders. GRPN closed up 1.48% as anticipation grew. Then came the earnings call and dashed the hopes of many believers.
The price plunged nearly 20% in after hours trading and things look even worse in pre-market.
Q2 results weren’t all bad:with revenue growing 44.8% year over year and non-GAAP income
- revenue $568.3 million – up 44.8% year over year
- operating income $46.5 million
- net Income $28.4 million, $0.04 per share
- non-GAAP net income $53.8 million, $0.08 per share
Earnings per share, excluding stock-based compensation and acquisition-related costs, exceeded estimates by 166%, but that wasn’t enough to offset the disappointment from revenues not meeting the target and the resulting doubts.[BANNER]
One of the most attractive attributes of Groupon has been the stunning growth rate. It’s clear that growth can’t last forever, but GRPN seems to be losing speed faster than investors had hoped. One of the ways the company has tried to remedy the situation is the expansion of operations and the so-called Groupon Goods.
This is the segment in which Groupon is the actual merchant selling a product to the consumer. Revenues from this segment rose significantly sequentially, but the whole concept has its opposition due to various reasons, including the need for holding inventory and the fact that through Groupon Goods the company has to compete with Amazon and eBay.
To some this may seem like a situation of glass half empty or half full, but the market response looks quite clear. Despite turning a profit, 30 minutes before the open GRPN is down 22.52%.
