Groupon Inc (NASDAQ:GRPN) shares witnessed a substantial decline in short interest in July. As of July 31, there was short interest amounting to about 84.8 million shares, a decline of 4.% from July 15’s total of nearly 88.4 million shares. Almost 18% of the company’s shares are sold short. Since going public in November 2011, Groupon has lost 70% of its value and is presently in a restructuring mode.
Groupon strategies take time
Investors are cautious about the company, which posted grim results last week. Groupon simply could not impress Wall Street with its performance. Out of the last 11 quarters, the company reported disappointing numbers in three-fourths of them. The company’s turnaround strategies also do not seem to be effective and are taking too much time.
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“Management has a sound strategy to get the business back on its prior growth trajectory but the pace of execution is still somewhat underwhelming,” said Jefferies analyst Brian Pitz, in a note.
Groupon has adopted a strategy of selling more discounted products through a distribution center in Kentucky. The company’s objective is to match up with the likes of eBay Inc (NASDAQ:EBAY) and Amazon.com, Inc. (NASDAQ:AMZN), both massive e-commerce players.
Zacks analysts maintained their Neutral rating on the stock in a report released to investors on Friday. The analysts assigned it a price target of $6.25 per share, noting that the company reported mixed second-quarter 2014 results. Presently, Groupon has a consensus rating of Hold and an average price target of $8.36 per share.
Groupon’s loss of 2 cents per share was below the Zacks consensus estimate of earnings of 4 cents per share. The company’s management revised their full-year EBITDA guidance downward. They lowered it due to continuous investment, which will take a toll on the company’s profitability in the future. Also competition in North America is intense and one of the company’s major hurdles.
Groupon CEO and co-founder Eric Lefkofsky was upbeat during the second quarter conference call. Lefkofsky said that the company made enough progress in the second-quarter. He also said that around 92 million users have downloaded the company’s new mobile app. Revenue increased 23% in the quarter, which marks this as the second quarter in which double-digit numbers were achieved, with single-digit revenue growth in the first three quarters of 2013, but losses continued due to increased investment.