Groupon Inc (NASDAQ:GRPN) share price have dropped 16% on Wednesday after analyst at Bank of America dropped the price target on the stock to $7.50. Stock tumbled to as low as $5.68, and eventually closed down over 12%. Apart from Bank of America many other research firms have lowered their price target on Groupon.

Groupon Inc GRPN

Analysts drop price target

Jefferies Group analysts have reduced their price target on Groupon from $8.00 to $7.00, in a research note on Wednesday. Analysts at B. Riley, also, dropped their price target on the shares from $9.50 to $8.50, in a research note to the investors on Wednesday, August 6, 2014. Analysts at Northland Securities lowered their price target on the stock from $7.00 to $6.00, in a research note on Wednesday, assigning an Inline rating on the stock. The stock, currently, has an average rating of Hold and an average price target of $8.58.

Primary reason for lowered price target

The primary reason for such behaviour from analysts was the second-quarter loss and higher taxes that eclipsed the increase in revenue, also a grim outlook. The daily online deal company posted a loss of $22.9 million, or 3 cents per share in the second-quarter compared to a loss of $7.6 million in the corresponding quarter of the previous year.

Groupon reduced its full-year profit outlook acknowledging the need to increase its market spending to revive the once dominant internet coupon company. Investors were expecting more and did not take the outlook very positively and are, also, concerned about company turnaround vows under CEO Eric Lefkofsky.

Guidance for the current quarter was also grim with company expecting to post adjusted earnings between the breakeven and two cents per share compared to the analyst’s average of 3 cents per share. The company is expecting to post $720 million to $770 million in revenue. Analysts expected $760 million.

Groupon CEO still confident

Groupon CEO Eric Lefkofsky talked about the positives such as an increase in the gross billings that showed the dollar amount of the customer purchase, after taxes and refunds.  Gross billing for the company surged to $1.82 billion, compared to $1.41 billion in the same quarter last year. Lefkofsky said that the quarter marks a record in terms of demand, where worldwide billings surged 29% to its highest level ever.

Lefkofsky said in a statement, “Our marketplace continues to gain traction and add to our growth.”