Groupon Inc (NASDAQ:GRPN) released its earnings numbers for the first quarter of 2014 on Tuesday afternoon after the market closed on Wall Street. The company showed a loss per share of one cent for the three-month period. Revenue in the quarter totalled $757.6 million. On Tuesday’s stock market shares in the embattled e-commerce company trended downward and hit $6.72, a price not since May of 2013.
In the run up to the release of today’s earnings report analysts were expecting to show a small loss, but make up for it in revenue growth. 23 analysts following the company, who were surveyed by Bloomberg, projected that Groupon Inc (NASDAQ:GRPN) would lose 3 cents by consensus. The company’s revenue was expected to come in at $738 million according to the same group of analysts.
Reputed short-seller Spruce Point Capital Management released its latest short report this week. The firm is shorting Canadian dairy and grocery manufacturer Saputo. Spruce Point chief Ben Axler believes the company is entering a phase of declining growth and highlights the financial stress and growing challenges he sees it facing, not only in Canada but Read More
Groupon turnaround lacks confidence
There are some who argue that Groupon Inc (NASDAQ:GRPN) is undervalued given its potential, and tonight’s earnings report will give them something to chew on. The firm’s chart shows that there isn’t all that much confidence in the turnaround promised by Groupon Inc (NASDAQ:GRPN), and the firm’s future is far from predictably paved.
Even if the Groupon Inc (NASDAQ:GRPN) turnaround goes the way that management wants, there’s still likely to be a lot of volatility in the firm’s stock until it shows investors exactly where its potential growth is coming from. That volatility, which is likely to be set off by an earnings report like this afternoon’s, is going to be a theme as long as confidence in the company’s turnaround chances remains low.
Groupon Inc (NASDAQ:GRPN) stock has already had an impressively volatile run since going public, and the company’s future may continue on those same lines. The fundamental reason is that the market the company is trying to break doesn’t verifiably exist at this time, and that’s been true since the company’s IPO.
Local commerce set to drive Groupon
Groupon Inc (NASDAQ:GRPN) is one of the few big companies really trying to drive the local internet. Local commerce is what Groupon is trying to drive in its offers, but there has been little traction for it, and competition is building. Yelp Inc (NASDAQ:YELP) is the other household name trying to capture that market, and things are not looking good for wither contender.
Since delivering its earnings report for the first three months of 2014, Yelp Inc (NASDAQ:YELP) shares have lost more than 7% of their value. The company’s trouble in putting together a solid profit cannot be ignored, and the same problems affect Groupon Inc (NASDAQ:GRPN). The question is whether those issues will ever be ironed out, or whether the investors betting on the advent of local internet commerce are doomed to lose money.
Groupon management is promising growth as it exploits the local e-commerce market, and though earnings and metrics may be unstable for the minute, there are believers in the long term vision. The company’s executives will have to defend that vision this afternoon in an earnings call. analysts and shareholders will hear from them at 5 PM EST. The company’s annual shareholder meeting will impose itself on May 24, and is likely to bring similar questions.