Groupon Inc (NASDAQ:GRPN) launched its IPO in 2011 at $20 a share with much buzz around its daily deals model, only to have that interest diminish quickly. At present, the company is trading at a price a little higher than a third of its IPO price. Likewise, other hotshots such as LivingSocial and smaller rivals also did not performed well.
An impressive performance
Was Ben Graham's big purchase of GEICO shares actually a value investment? Perhaps it was contrary to what many believe. "In 1948, we made our GEICO investment and from then on, we seemed to be very brilliant people." -- Benjamin Graham, 1976 Both Benjamin Graham and Warren Buffett can attribute a large part of their Read More
However, a report from Daily Finance by Rick Aristotle Munarriz discusses one not so popular player in the flash-sales game that has not seen the same fate as the other hotshots. Shares of Vipshop Holdings Ltd – ADR (NYSE:VIPS), a popular name in China, have almost tripled over the past year. The company’s revenue surged two-fold in its latest quarter, with earnings surging even faster. In China, Groupon replica Vipshop is a recognized name offering limited-time sales on discounted apparel.
The company’s latest quarterly report was also impressive, with revenue surging 130% over last year’s third quarter to $882.6 million due to a growing number of active customers.
Vipshop’s profitability surged even higher and at a faster rate, along with wider margins. Adjusted net income was up 207% to $46.3 million. Vipshop’s sales and adjusted earnings were above analysts’ expectations. Vipshop is expecting an increase of 84% to 87% year over year in revenue for the current quarter.
Groupon Inc’s business model not flawed
“Groupon isn’t exactly chopped liver,” says the author, adding that it posted a revenue growth of 27% year over year to $757.1 million. “International expansion helped pad the industry bellwether’s performance,” but Groupon still managed to add 16% rise in North America sales over the past year.
Investors are not confident on the stock because of its uneven profits and declining growth rate, but the business model still holds relevance, as there are customers who still go for deals.
Vipshop offered its shares to the public in early 2012, which was a few months after Groupon’s IPO. Vipshop might not be as popular as Groupon, but for investors dealing in Chinese equities, the name is very familiar. “It’s the company that beat Groupon at its own game,” concludes the author.