Short interest in Groupon Inc (NASDAQ:GRPN) surged in September, and at the end of the month, it totaled nearly 85 million shares. That’s an increase of 2.2% from the Sept, 15 total of about 83.2 million shares. Around 19% of the company’s shares are short sold.
Recently Groupon has been subjected to various analyst ratings. In a research note on Friday, Analysts at Evercore downgraded the company’s shares from Equal Weight to Sell and maintained a $5.50 per share price target. Analyst Ken Sena of Evercore is doubtful that the company can hit the 2014 adjusted EBITDA forecast of $270 million. Also Sena sees minimal up-trend in Groupon shares unless the company sees substantial inflection in positioning among consumers and merchants.
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After announcing the results of the second quarter of its fiscal year 2014, the company has given a weak outlook for the third quarter. Groupon is expecting adjusted earnings of 0 to 2 cents per share, whereas analysts had estimated earnings of 3 cents per share for the same period. Analysts lowered their expectations by 67% to 1 cent per share after the weak outlook provided by the company.
Further, the company has lowered its full-year guidance for adjusted EBITDA from over $300 million to around $270 million. The company’s full-year guidance also fell short of analysts’ estimate of $299.7 million for the same period. Analysts have revised down their estimate for Groupon Inc’s adjusted EBITDA since then to $271.5 million for the year.
Groupon in transition
Groupon lowered its guidance as it is transforming from a daily deal email offers company to more of an e-commerce retailer. Also,it is making efforts to become a mobile retailer, reducing its dependence on a deal-based model. There have been increased marketing costs effecting the outlook and results. Even after lower guidance, management is keeping high expectations for the future.
Due to an ongoing sluggish performance, analysts have axed their 12-month target price estimate on Groupon by approximately 40% since the beginning of the year. Investment firms that are bullish on the stock include Sterne Agee & Leach, Piper Jaffray, Deutsche Bank, and Barrington Research. On average, Groupon shares have gotten six Buy ratings, 14 Hold ratings and three Sell ratings with an average price target of $7.35 per share.