Groupon Inc (GRPN): Too Early For A Turnaround

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Groupon Inc (GRPN): Too Early For A Turnaround
By GrouponRUS (Own work) [CC BY-SA 4.0], via Wikimedia Commons

Groupon Inc (NASDAQ:GRPN) shares rose as much as 3.88 percent today ahead of the company’s next earnings report, which some argue will be a make or break one for the company. The daily deals giant’s last earnings report in February came up very short of Wall Street expectations. As a result, co-founder and CEO Andrew Mason was pushed out.

Groupon Inc (GRPN): Too Early For A Turnaround

Although investors are expecting a lot out of Groupon at this time, it may be a bit too early to expect much. Nonetheless, investors are hopeful. The company’s stock has gained over 30 percent since the beginning of the year, with a lot of that coming soon after Mason left the company.

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Expectations For Groupon

Analysts are predicting that Groupon will report adjusted profits of 3 cents per share on total sales of $591.3 million for the first quarter of the year. That’s compared to adjusted earnings per share of 2 cents on $559.3 million in revenue in the same quarter last year.

Even Piper Jaffray analyst Gene Munster, who has an overweight rating on Groupon Inc (NASDAQ:GRPN), doesn’t think the company will do so well in the near-term. He believes the company’s sales for the first quarter will be in line with consensus, although he expects that its guidance for the second quarter will be lower than the expectations of Wall Street.

Will It Be Life Or Death For Groupon?

There’s little doubt that right now, sentiment about Groupon is very low, as it should be. Yahoo! Finance contributor Marek Fuchs makes both life and death cases for the daily deals company, although the case for life is far less compelling than the one for death.

Few investors will be surprised if Groupon Inc (NASDAQ:GRPN) misses consensus in this afternoon’s earnings report. The company has been trying to reinvent itself and failing, and at this point, no one knows where it will go next or even if it will get up to walk another mile or two.

Fuchs’ case for life for Groupon is based on an entire turnaround, which is unlikely to happen, at least any time soon. There is just too much competition in the daily deals space, and there aren’t many places for Groupon to go. It seems as if the company has just been floundering around looking for success but not finding any.

Along with today’s earnings, we could see reports that more executives are leaving, which could be both good and bad for the company. On the one hand, new blood at the struggling company couldn’t hurt, but on the other hand, investors like to see stability.

So today’s earnings report is an important one for Groupon, but let’s not get ahead of ourselves here. We’re going to have to see some major changes before any major turnaround in earnings can really be expected.

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Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at [email protected]
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