The shares of Groupon were trading lower today after disclosing its restructuring initiatives related to its international operations.
Based on its regulatory filing with the Securities and Exchange Commission (SEC), the board of directors of Groupon, approved the overall reduction of its global workforce by 1,100 positions. The company expected to complete the job cuts by September next year.
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Groupon had 12,000 employees as of December last year, according to a regulatory filing.
The stock price of Groupon was down more than 2% to $4.06 per share at the time of this writing, around 12:01 AM in New York. The company lost more than 50% of stock value year-to-date.
Groupon expected to record $35 million pre-tax charges
Groupon estimated that it would record total pre-tax charges of up to $35 million related to the job cuts. The expected pre-tax charges included around $22 million to $24 million in the third quarter this year.
The company expected to pay all of the pre-tax charges in cash and will be related to employee severance and compensation benefits. Groupon added that an immaterial amount of the charges would be related to asset impairment and other exit costs.
Groupon plans to exclude the restructuring charges from its non-GAAP financial metrics including adjusted EBITDA and non-GAAP EPS.
Additionally, the company expects that any cost savings from its restructuring actions will be immaterial in 2015. Group plans said its cost savings in the following years will be primarily invested in the business.
Sequoia India invested in Groupon India
In August, Sequoia India, a venture capital fund agreed to invest in Groupon India The online local marketplace operator did not disclose the amount of investment, but emphasized that it will remain a significant shareholder in Groupon India.
Groupon CEO Eric Lefkofsky said, “The potential of the Indian market is huge — our decision to bring in Sequoia India is expected to provide the additional resources our India business needs to grow and become a true local commerce leader.We look forward to watching the business grow and evolve as a continued shareholder in the company.”
Groupon stock rating
Analysts at Zacks equity research recommended a Sell rating on the shares of Groupon in the short-term. Ten analysts covering the stock have a Hold rating on the stock. Seven analysts issued a Strong Buy recommendation.
Fourteen analysts covering Groupon had a short-term price target of $6.81 per share.