Another Post-Earnings Flop for Groupon

Groupon down big in after-market trading following revenue miss

   

Despite a number of previous disappointments, investors were getting enthusiastic ahead of Groupon’s (NASDAQ:GRPN) second-quarter earnings report. During the past couple weeks, shares spiked by almost 20%.

Once again, the party’s over. Groupon shares are down in Monday’s early after-hours trading after yet another disappointing report.

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Earnings actually were a bright spot: Adjusted earnings came to $53.8 million, or 8 cents a share, which easily cleared analyst expectations for 3 cents per share.

Third-quarter guidance numbers also were fine. Groupon is forecasting revenue of $580 million to $620 million — the Street consensus is for revenue of $605.5 million — and income from operations of $15 million to $35 million.

But revenues of $568.3 million came up short of expectations for $573 million. And there could be a bit more trouble ahead on that front.

Since coming public last November, Groupon has been plagued with accounting issues that forced two separate earnings restatements. Now there might be some more concerns.

First of all, the company now is selling goods on a discounted basis; it can include 100% of the revenues in reporting. That’s not the case for its core voucher business; the revenues are split with the merchants, so it can only include a percentage of those revenues in accounting.

The second quarter report also indicated that Groupon will include third-party revenue — in which the company acts as an agent for the merchant — in its results, which could further inflate revenues.

Interestingly enough: In late 2010, Groupon rejected a $6 billion buyout offer from Google (NASDAQ:GOOG). As of Monday’s post-market trading price of around $6.40, Groupon is now worth just two-thirds of that. With Groupon slowing back down again, it seems hard to think it will get back to that $6 billion level — and seemingly impossible to ever return to its IPO price of $20 per share.

Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned securities.


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