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Groupon Delivers a Profitable Second Quarter in 2015

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Groupon fails to meet analysts’ expectations

Groupon (GRPN), a deal-of-the-day website, released its 2Q15 results on August 7, 2015. The company reported a profit of $109.1 million in the quarter, compared to a loss of $22.9 million in 2Q14.

Groupon’s revenue was up by 3.1% to $738.4 million, however, it failed to meet analysts’ expectations of $766 million. The adjusted loss per share was 3 cents per share for 2Q15, compared to analysts’ estimates of 2 cents per share.

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The company’s active users increased by 6% year-over-year to 48.6 million. Groupon also sold its stake in Ticket Monster, a South Korea–based mobile commerce company, for $360 million. This resulted in the addition of 21 cents a share, as the sale resulted in an important return on the business Groupon purchased from its rival LivingSocial last year.

According to the above graph and a report from Zacks Investment Research, with the exception of 4Q14, Groupon’s adjusted earnings per share have declined in the last two quarters of fiscal 2015.

Groupon’s success

Since its launch in 2008, Groupon has showcased immense growth in its visibility around multiple cities and its user base. In 2011, Forbes listed Groupon as the fastest-growing company. The same year, Groupon filed for a $750 million IPO after turning down a $6 billion offer from Google (GOOG) to acquire it.

However, after its 2011 IPO, the company began to report losses each quarter, resulting in a 42% fall in its share price at present.

Groupon has faced tremendous competition from e-commerce giants such as eBay (EBAY) and Amazon (AMZN), which are becoming the first choice of merchants due to the lucrative services being offered. For example, eBay Deals has been a highly successful service, offering benefits to customers such as convenient ordering, free shipping, and low prices.

For diversified exposure to eBay, investors can consider ETFs like the SPDR S&P 500 ETF (SPY), which invests in the 500 largest companies in the US. The technology sector accounts for 18% of the fund’s portfolio.

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