Ahead of the Bell: Groupon shares plunge
NEW YORK (AP) — Groupon shares are sliding in premarket trading as investors digest yet another quarter of slower revenue growth and a shift to a less profitable business model.
The decline in the company's core online deals business — it "has almost slowed to a halt," said Citi's Neil Doshi — has weighed on Groupon's stock price since its November initial public offering of stock.
The IPO was priced at $20 per share. In Friday's premarket trading, shares shed 66 cents, or 17 percent, to $3.26. That sets Groupon on track to open at its lowest price since going public.
The company, which is based in Chicago, blamed weakness in crisis-stricken Europe for its shortfall in the July-September quarter. Europe makes up the bulk of Groupon Inc.'s international business.
As its deals business shrinks, particularly in Europe, Groupon has been trying to establish itself as a local e-commerce company.
The "Goods" division's growth in the quarter was better than analysts expected, said Benchmark's Daniel Kurnos. But the e-commerce tack is significantly less profitable than the daily deals business Groupon trumpeted as it went public, said Stifel analyst Jordan Rohan.
Revenue grew 32 percent in the third quarter. The middle of its guidance range for the current quarter, which ends in December, suggests the same pace of growth.
That's a sharp slowdown: In the fourth quarter of 2011, in its first earnings report as a public company, Groupon said its revenue nearly tripled. That fell to 89 percent in the first quarter of this year, 45 percent in the second quarter and 32 percent in the third.
The company has posted only one quarterly profit since it went public, and that was in the April-June quarter.