Oh, where to start with the discount-coupon king? From social media highflyer just one year ago when it went public and saw its shares climb as high as $27, the stock now lies just below the $3 mark, down nearly 90% over the last year.
Ouch. Accounting problems, financial statement do-overs, drinking-game parties and, of course, a spurned offer of $6 billion from Google (NASDAQ:GOOG) in 2010 are just a few egg-on-your face moments. It also doesn’t help when competition comes barreling in, with LivingSocial — and lots of others — now in the same market. Of course, LivingSocial hasn’t been wildly successful, either.
Groupon’s third-quarter earnings release can’t give anyone cause for short-term hope. The company announced higher revenue but alas just breakeven earnings and a downer forecast for the rest of the year. The end result was a slew of brokerage downgrades and a slumping share price.
Want worse news? As cited in the Jacksonville Business Journal, a Raymond James (NYSE:RJF) report found that “out of 115 merchants surveyed 39 percent would not run another Groupon promotion, citing high commission rate and low rate of repeat customers as the top reasons why.”
Few repeat customers for merchants casts serious down on Groupon’s model, and its questionable financials all add up to a business that isn’t likely to attract any fixer-upper acquirer.
Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing he is long AAPL and MSFT.