Groupon Takes a Tumble
by Rosa Jin ~ November 13th, 2012. Filed under: Entrepreneurship, Finance, Uncategorized.
The online discount site Groupon struggles to find a leg to stand on, as its 3rd quarter reports have investors everywhere shaking their heads in disappointment.
Despite being fairly new (public since November 2011), the company’s share price has dwindled down from its peak (in November 2011 as well) to when it closed at $2.76 on Friday the 9th, 25% lower than its previous “all-time low of $3.68 a week ago, on Nov. 1.” In addition, the company’s predicted earnings of “$580 million to $620 million” only proved to be a detrimental valuation as revenue grew (however slowly) to $569 million, which still missed the hopes of Wall Street by a whopping $22 million.
As the company watches its value drop lower and lower, new methods of bringing in sales are being introduced – predominantly through Groupon Goods, the brand’s take on e-commerce which actually “[sells] physical goods such as electronic gadgets, housewares and clothes.” This branch into direct retail allows the company to use the whole of the products’ sale in calculating revenue, as opposed to the basic Groupon that shared the sale with the collaborative company – ultimately increasing Groupon’s total revenue. More recently, the business has announced that for the coming holiday season, it is offering “free shipping and returns for items bought through Groupon Goods,” as well as debuting “its first Groupon Goods online holiday catalog.”
These motions, effective nonetheless, are clearly set up with the aim of increasing sales, but will it be enough to reverse the damage that’s been done so far? With this question (as well as my previous post) in mind, I ask:
what does it take for a company to stand up after it’s fallen down?
Sources Cited:
http://www.chicagotribune.com/business/ct-biz-1110-groupon-20121110,0,7499711.story
http://ca.finance.yahoo.com/q/hp?s=GRPN&a=10&b=4&c=2011&d=10&e=13&f=2012&g=d&z=66&y=198
http://www.canadianbusiness.com/article/106065–groupon-stock-falls-after-3q-results-fall-short
http://www.businessweek.com/ap/2012-11-12/groupon-goods-offers-free-shipping-for-holidays
Photo:
http://www.digitaltrends.com/web/can-groupon-succeed-with-a-30-per-year-vip-subscription-model/