Groupon Stock Takes A Wild Ride After Revenue Beat, Earnings Disappointment

Feb 20 2014, 5:24pm CST | by

Imagine it’s Christmas morning and under the tree you find the shoes you have been eying for months. You are overjoyed, but when you try them on you realize the shoes are far too small and can’t be returned. That is probably what it felt like to be a Groupon investor after earnings Thursday.

Following an initial double digits after hours pop, Groupon shares swung down close to negative 10.5% to $9.20.

Groupon reported fourth quarter revenue of $768.4 million, well ahead of Wall Street Analysts’ $718 million consensus estimate and 20% higher in the same period in 2012. In a statement CEO Eric Lefkofsky said, “Our record performance in the quarter was led by strength in Goods, as shoppers increasingly looked to Groupon to fill their holiday needs.” The company reported $286 million in goods gross billing — a measure the total dollar value of customer purchases minus taxes and estimated refunds — up 18.8% from the same period in the prior year.

Digging further into the report, however, the package becomes less desirable. Despite strong revenue growth, the digital deals company still finished the quarter in the red, with a $81.2 million net loss thanks in part to a $85.5 million non-operating loss related to an investment in China and $34.5 million in acquisition costs. Including the China loss and acquisition costs the company reported a per share loss of 12 cents. Wall Street expected a GAAP loss of a penny. However, excluding the China loss and other costs the company reported 4 cents in earnings per share, beating a 2 cent earnings estimate.

For the full year revenue increased 7% to $5.8 billion, 31% growth in North America offset declines around the world. Net loss (including China losses, acquisitions costs and stock compensation) came in at $95.4 million, or 14 cents a share. On the non-GAAP basis the company reported earnings of 11 cents per share.

Looking ahead the company expects first quarter 2014 revenue to fall between $710 million and $760 million and non-GAAP loss per share as low as negative 4 cents and as high as negative 2 cents.

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Source: Forbes Business


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