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Groupon shares drop amid disappointing results

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Voucher website Groupon has seen its shares tumble by more than a fifth following disappointing financial results which were below investors’ expectations, it has been announced today.

Reporting a 45 per cent year-on-year rise in revenue to $568.3 million (£362 million), the company yesterday noted that growth would have been 53 per cent compared with the same quarter last year had it not been for the detrimental effect of foreign exchange rates.

Citing “challenges in Europe”, Andrew Mason, CEO of Groupon explained that the company has strengthened supplier relationships as its seeks to build on the opportunities presented by local commerce.

Following the results, shares in the company closed at $7.55 according to the BBC before falling below $6.50 in after-hours trading.

Jon Copestake, retail analyst from the Economist Intelligence Unit, believes that challenges may continue for the firm.

“Groupon was considered a rising star in retail innovation just a few years ago,” he said.

“It’s subsequent decline is partly a reflection of the weight of expectation initially placed upon the firm. Failure to take off in China, which lends itself well to the crowd sourced discount model, and the general atmosphere of competitive discounting both present challenges.

“Although the Eurozone crisis will certainly have affected more discretionary spending, it should have proved an opportunity to tap into increasingly price sensitive markets. This may be something Groupon needs to address for future growth.”

Published on Tuesday 14 August by Editorial Assistant

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