Daily deals site Groupon Inc(NASDAQ:GRPN) has a lot to
prove to investors when it announces its second quarter results later in the
day.
Things have not been good for the stock, which have
depreciated about 60 percent from its IPO price of $20 a share last November.
Ahead of the closing bell on Monday the stock was up
3.93 per cent at $7.73, after closing at $7.44 last week.
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The company which offers daily deals on products could
be facing user fatigue and analysts are concerned about its slowing growth.
The weak economy in Europe has resulted in softer
billings for the company, while smaller, smarter companies like LivingSocial
are making inroads into its domain.
Sterne Agee analyst, Arvind Bhatia, who recently
downgraded the stock, said in a note, "Given the recent decline in the
share price, we are clearly late in the downgrade." He added that the
company was unlikely to see its stock price rise until analysts lowered their
estimates.
Analysts expect Groupon to post earnings of 3 cents
per share on revenue of $574.8 million. In May, Groupon forecast revenue of
between $550 million and $590 million.
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.
How Should
Investors Trade GRPN Ahead of Earnings, Find Out Here
Investors are uncertain how the company will sustain
its revenues with its format of daily deals that may have reached saturation
points. They have also been questioning how the company plans to account for
its new business ventures such as Groupon Goods.
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