Shares of Groupon
Inc (NASDAQ:GRPN) declined sharply by about 10% on Monday on the Nasdaq, due to
issues regarding merchant demand for the daily deals of the company. Raymond
James analysts, led by Aaron Kessler released a report that comprised a survey
including more than 100 merchants of Groupon on Monday, which clearly showed
that they have various apprehensions in working with the organization.
The survey revealed that 16% of the merchants
were "very satisfied” with championing Groupon promotions and 37% rated it
“satisfactory”. However, the portion of “unsatisfied" or "very
unsatisfied," amounted to a third of the group and 39 have stated that
they might not promote another Groupon deal over the next 2 years.
Groupon, which specializes in daily deals, went
public last year. Shares have come down to around three-quarters of their value
in comparison to their value a year back when it became public. Accounting
issues have been giving constant trouble, but some analysts and investors are
of the opinion that the demand for daily deals is slowly reducing.
How Should
Investors Trade GRPN Now? Find Out Here
Peter Krasilovsky, vice president and program
director, BIA/Kelsey, which tracks local advertising and commerce, said that
though 2012 has been a year of substantial growth for the online deals market,
the time of maturity might be approaching soon. The deals have become “too
available” to customers, which is why the market might be standing on the brink
of saturation.
Groupon was put
on Evercore Partners’ "conviction sell" list on Monday by
analyst Ken Sena. He has a price target of $3 and has given an
"underweight" rating to the stock. He feels Groupon should revise
marketing strategies and devote more time in implementing them in order to come
out of the saturation stage.
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