The market is keenly awaiting the second quarter
results of daily deals site Groupon Inc (NASDAQ:GRPN) on Monday after market
closes, amidst concerns about its future growth prospects.
Investors are uncertain how the company will sustain
its revenues with its format of daily deals that may have reached saturation
points. Investors have also been questioning how the company plans to account
for its new business ventures such as Groupon Goods.
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“The big question is whether we are starting to see
deal fatigue come into effect, so I think a lot of focus will be on their top
line,” Evercore's Ken Sena told Dow Jones' Marketwatch in an interview
Groupon is also facing the severe backlash that social
media sites have been facing in the last few months over their declining
fortunes and their inability to provide clarity about their profitability
margins and revenues
Shares of Groupon have dropped nearly two-thirds from
their IPO price of $20 a share in November last year. The shares rallied
briefly following its results in May but then have languished again.
On Friday however Groupon shares were up 12 percent
with Morgan Staley releasing an upbeat note on the company. Most of Wall Street
brokerages are mantaining their neutrsl rating on the stock. Now, the stock is
up another 5% to $7.82, although well off session high of $8.05.
Scott Devitt of Morgan Stanley said on Friday, that
the company will meet or beat Wall Street’ estimates for the period.
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He cited data from Yipit that suggests a 16 percent
rise in North America deals offered, and argues that deals offered is a “more
precise statistic” to measure the health of the business than just revenue or
gross billings.
"This growth shows Groupon is improving deal
density, and can thus provide superior inventory and targeting to customers,”
Devitt wrote.
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