Groupon Inc (GRPN) Declines as Executive Departs

Groupon

Online daily deals provider, Groupon Inc (NASDAQ:GRPN), declined 6.1% (68 cents) to close at $10.40 on Feb 11, 2014, after it filed an 8K to notify the resignation of its product chief, Jeff Holden.

Jeff Holden is known for his deep understanding of consumer behavior, which is significantly important for a consumer-oriented company like Groupon. The company is undergoing a transition from a mere daily deals provider to a broader based e-tailer and the departure of this key executive can hurt the product development process in the near term.

Groupon Inc GRPN

Nevertheless, we believe that the sell-off reflected growing concerns about the company’s upcoming fourth-quarter results. The company is set to announce fourth-quarter results on Feb 20, 2014. Groupon Inc (NASDAQ:GRPN) forecasts revenues in the range of $690.0 to $740.0 million. The company expects the bottom line to range from breakeven to earnings of 2 cents per share.

Currently, the Zacks Consensus Estimate is pegged at a loss of 1 cent, which is lower than the company’s guided range. Moreover, the mid-point of the revenue guidance range is slightly lower than the Zacks Consensus Estimate for revenues.

However, we believe the strong holiday season sales will boost Groupon’s fourth-quarter results. Billings were up 30.0% from the year-ago period, during the four-day holiday weekend in Dec 2013.

Moreover, Groupon Inc (NASDAQ:GRPN)’s policy of launching new products on a regular basis and the growing popularity of its mobile app continues to attract consumers. The company noted that more than 50% transactions (55.0% of North America) in the holiday season were carried out through mobile devices.

We believe Groupon Inc (NASDAQ:GRPN) is well positioned to gain from the rising e-Commerce spending on mobile devices, a profitable domestic market and an expanding international market.

Although mobile presents ample growth opportunity, increasing competition from established players such as eBay (EBAY) and Amazon (AMZN) as well as small companies like LiveDeal Inc. (LIVE) remains a major concern.

We also note that the barriers to entry into the daily deals market are quite low, which will attract new entrants, going forward. Hence, to remain competitive, Groupon will be forced to continue investments to expand its merchant base, which will hurt profitability, going forward.

Currently, Groupon carries a Zacks Rank #3 (Hold).

AMAZON.COM INC (AMZN): Free Stock Analysis Report

EBAY INC (EBAY): Free Stock Analysis Report

GROUPON INC (GRPN): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

For exclusive info on hedge funds and the latest news from value investing world at only a few dollars a month check out ValueWalk Premium right here.

Multiple people interested? Check out our new corporate plan right here (We are currently offering a major discount)






About the Author

Zacks
At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1986 it has nearly tripled the S&P 500 with an average gain of +26% per year. These returns cover a period from 1986-2011 and were audited and attested by Baker Tilly, an independent accounting firm.

Be the first to comment on "Groupon Inc (GRPN) Declines as Executive Departs"

Leave a comment