Groupon (NASDAQ:GRPN) will report third-quarter results after the market closes Thursday, though investors must think they already know what’s coming.
For the past month, GRPN shares are off nearly 30%, extending the company’s 86% slide since Groupon came public a little more than a year ago.
The Street is expecting Groupon to report revenues of $591 million, up from $430.2 million in the same period a year ago, and turn a year-ago loss into a 3-cent gain. In light of the muted estimates, Groupon probably has a good chance to beat.
Still, that side of the report shouldn’t matter to longer-term investors as much as the guidance, where investors will learn more about the company’s headwinds. Are consumers getting tired of daily deals? And are merchants avoiding the programs because of the high costs and lack of customer loyalty? Other concerns include the potential disruptions from Hurricane Sandy, as well as the state of business in Europe.
We’ll also find out more about the early results of Groupon’s aggressive shift into selling physical goods. While the move is expected to help the company keep up its growth, the business is almost certain to put downward pressure on margins.
Unless Groupon can show that the long-term outlook is promising, the earnings announcement might just be a short-term play for traders betting on a beat this quarter.
Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook.“ Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.