Another quarter of dismal revenue growth and a shift to a business model that’s less profitable, dumps Groupon Inc (NASDAQ:GRPN)'s stock to its lowest trading price since the company’s IPO one year ago. ValueWalk was the first to predict trouble for Groupon stock. ValueWalk’s Jacob Wolinsky called the company’s IPO “$20 billion worth of snake oil” on the day it went public.
Today, in premarket trading, Groupon Inc (NASDAQ:GRPN) was trading at $3.26 per share, after shedding 66 cents, or about 17 percent of its value. The company’s IPO was set at $20 per share. Groupon officials blame problems in Europe for its third quarter revenue shortfall. Most of the company’s international business comes from Europe.
The growth of the company’s goods division was better than expected, although Groupon Inc (NASDAQ:GRPN)'s new e-commerce business model produces much lower profits than the company’s former daily deals business model, as evidenced by continually sliding revenues. Third quarter revenue for the company did grow 32 percent, however that’s a significant slowdown from where the company was at its IPO a year ago. In 2011’s fourth quarter, the company reported nearly tripled revenue, but by the first quarter of 2012, that dropped to 89 percent. Groupon Inc (NASDAQ:GRPN)'s revenue dropped again in the second quarter to 45 percent.
Analysts at Bank of America Merrill Lynch are lowering their estimates for 2013/2014, after resetting their GM assumptions. They’re estimating 64 percent and 62.9 percent, a dramatic decrease from their previous estimate of 73.9 percent. Analysts expect Groupon Inc (NASDAQ:GRPN) stock to continue trading at a discount because of the unpredictability of their model. They believe that the company’s stock performance next year will depend on whether Groupon Inc (NASDAQ:GRPN) can begin leveraging search results to become a major destination for web users searching for local experiences. They expect Wall Street to continue being cautious with this stock.