Groupon shares fall 23% in early US trading

GROUPON PLUNGED to a record low yesterday after the largest daily-deal website reported second-quarter revenue that missed estimates as economic weakness in Europe curbed online coupon sales.

The shares retreated 23 per cent in early trading in New York yesterday, and earlier touched $5.76 for the biggest decline since the company’s initial public offering in November. By yesterday morning the stock had lost 62 per cent since its IPO, leaving the company with a market value of $4.88 billion – less than the $6 billion buyout offer Groupon received from Google before it opted for a public market debut.

International revenue, which makes up more than half of the total, was reduced by currency weakness and a lack of demand for big-ticket items in Europe, Groupon executives said.

Revenue rose 45 per cent to $568.3 million, the firm said in a statement yesterday. That fell short of the average analyst estimate of $575.3 million.

International revenue increased 31 per cent to $308.2 million in the second quarter, Groupon said. Growth would have been 45 per cent without the impact of foreign exchange rates.

The company makes money by selling discounts – known as Groupons – from businesses such as restaurants and nail salons. It then splits the revenue with the businesses.

Second-quarter net income was $28.4 million compared with a loss of $107.4 million a year earlier.

Excluding some costs, profit was 8 cent a share, which incorporates a 4 cent gain from items including the exchange of a minority interest in its China operations.

“We had some challenges in Europe,” Groupon chief financial officer Jason Child said yesterday. “Because over half of our business is outside the US, the strengthening of the US dollar versus the variety of currencies that we transacted declined since we gave guidance last quarter.”

European shoppers bought fewer deals associated with discretionary purchases of $100 or more in the quarter, chief executive officer Andrew Mason said yesterday.

Third-quarter revenue will be $580 million to $620 million, Groupon said. – (Bloomberg)