Seeking Alpha

Groupon now -11.3% AH. Company promises strong 2H EBITDA growth.

  • Worries about Groupon's (GRPN) slumping margins continue to overshadow the top-line improvement seen in the company's European ops, and have led shares to fall further.
  • The culprit: Groupon's Third Party & Other sales (daily deals-dominated) fell 3% Y/Y in Q4 to $401.7M, while its direct sales (e-commerce-dominated) rose 50% to $366.8M. The former business posted an 86.9% gross margin, and the latter just a 7.9% GM.
  • Nonetheless, the company predicts its EBITDA will "ramp pretty dramatically" in 2H, as its e-commerce ops become more efficient and efforts to drive site traffic (and thus reducing e-mail dependence) bear fruit.
  • Groupon also says it's working on an e-mail platform (codenamed Mindstorm) that will allow it to "market categories of deals rather than just one per email." CEO Eric Lefkofsky says the solution will cut down on the number of "irrelevant" e-mails sent.
  • An $85.5M write-down has been taken on Groupon's minority stake in Chinese deals provider FTuan. The investment now has a carrying value of zero.
  • While revenue rose 20% Y/Y in Q4, the e-commerce shift led SG&A spend to fall fractionally to $306.1M. Marketing spend fell 7% to $56.5M.
  • Q4 results, guidance/details, slides
Comments (6)
  • Kmoney01
    , contributor
    Comments (60) | Send Message
    9.13 is support. 2/20/14
    20 Feb, 10:41 PM Reply Like
  • Coalfan
    , contributor
    Comments (42) | Send Message
    Ya sure.
    21 Feb, 01:05 AM Reply Like
  • Kenjisan
    , contributor
    Comments (47) | Send Message
    and what happens when support breaks?
    21 Feb, 09:20 AM Reply Like
  • King Rat
    , contributor
    Comments (574) | Send Message
    9.13 is resistance. 2/21/14
    20 Feb, 10:54 PM Reply Like
  • Sebanightwish
    , contributor
    Comments (1023) | Send Message
    Top forecast results. Markets react hysterically punishing Groupon shares.
    Outlook dissapoint but overall was very positive. EPS $ 0.04
    and income 20% above what the market expected.
    When the market loses hysteria, these shares shine again, this will be soon. Given that the end result is profitable.
    21 Feb, 07:08 AM Reply Like
  • bruceolds
    , contributor
    Comments (4) | Send Message
    Groupon is worth more than the 6 billion Google offered for it before the IPO. I'm loading up at this 8.50 level.
    21 Feb, 03:02 PM Reply Like
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