Groupon deals another blow to investors

Wed Nov 4, 2015 10:18am EST
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By Supantha Mukherjee

(Reuters) - Exactly four years ago, Groupon Inc's initial public offering was priced at $20, valuing the company at $13 billion.

On Wednesday, the stock fell 30 percent to as low as $2.79, giving the operator of daily deals website a market value of less than $2 billion.

Such has been the precipitous decline of a company that was once considered an e-commerce posterboy.

Groupon reported yet another dismal quarter on Tuesday and announced a slew of measures to turn around its business, including spending $150 million-$200 million more on a marketing blitz.

But Wall Street analysts were not convinced.

"We understand the company's investment in marketing approach but do not believe it solves the company's underlying challenge, which is building a more compelling product that virally attracts users," PiperJaffray analysts wrote in a note.

At least seven brokerages cut their price targets on the stock by as much as $5 to a low of $2.25. The median price target has nearly halved in the last three months to $4.00.

Competition has been tough for Groupon - it battles with Yelp Inc and GrubHub Inc for local dollars and with Inc, eBay Inc and Priceline Group Inc in its goods and travel business.   Continued...

People enter and leave Groupon Inc corporate office and headquarters in Chicago, Illinois, November 4, 2011. REUTERS/Frank Polich