Groupon Loses Market Value

by , Feb 28, 2013, 11:34 AM
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In the surest sign yet that the once-booming daily-deal space has busted, Groupon lost a quarter of its market value on Wednesday after missing fourth-quarter projections, and revealing that it began taking a smaller cut of deal revenue over the holidays.

“The cut in its ‘take rate,’ which some analysts had said was needed to revive flagging interest among merchants in its Internet offers, was a blow to fourth-quarter results,” Reuters reports.

“Groupon Inc.’s fourth-quarter results were so bad that there is new talk about firing CEO Andrew Mason,” according to DailyFinance.com.

“Though Mason is working to lessen the company’s reliance on coupons, his efforts so far have failed to meet expectations,” writes Bloomberg, citing comments from Ascendiant analyst Edward Woo.

The problem? “Customers have hit their saturation point with endless deals popping up in their inboxes, so Groupon is diversifying with new businesses,” reports CNNMoney.com. “These include a product sales business called ‘Goods.’”

Alas, “thanks to its Groupon Goods offering, the company -- which is seeing slowing growth in its coupon business -- is now competing with juggernauts like Amazon and eBay in a sector where margins are thin,” AllThingsD explains.

“The lower revenue outlook comes after Groupon's chief rival in the daily deals space, LivingSocial, laid off 400 employees … during the holidays and posted a net loss of $650 million for the year,” Mashable points out.

Not going down without a fight, however, Groupon COO Kal Raman vowed to get "sustainable operating leverage" over costs in the first half of 2013. That’s code for big layoffs, Business Insider suggests.

On the bright side, Groupon on Wednesday also said that customer acquisition costs on a per-new-customer basis were down 61% year-over-year, while its total active customer base was up 22% compared to last year, The Next Web notes.

 

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