Why Groupon Stock Fell in May 2017



Groupon falls on disappointing 1Q17 results

US-based (SPY) Internet (FDN) stock Groupon (GRPN) fell 23.2% in May 2017. On May 3, 2017, Groupon announced its 1Q17 results and reported revenues of ~$673.6 million, a fall of 3.6% YoY (year-over-year) compared to revenues of ~$698.4 million in 1Q16. 

Analysts estimated the company could post revenues of ~$724.4 million in 1Q17. Groupon reported EPS (earnings per share) of $0.01 in 1Q17, beating analyst EPS estimates of -$0.01 by $0.02.

Groupon’s (GRPN) net loss from operations fell from ~$47.3 million in 1Q16 to ~$11.7 million in 1Q17. The company’s net loss also fell from $45.6 million in 1Q16 to ~$20.4 million in 1Q17. Groupon stock fell more than 13% after it released its 1Q17 results.

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However, Groupon is focused on growing its customer base. In February 2017, Groupon stock rose 22.6% after it announced the acquisition of LivingSocial, and its 4Q16 results beat analyst estimates. Groupon expects over a million new active customers due to LivingSocial’s acquisition. In fiscal 2016, Groupon gained over 5 million new customers.

Profits and operating costs

Groupon (GRPN) is struggling to generate profits as its operating costs have increased over the last few years due to expansion. Groupon had exited the international market to cut costs and focus on North America.

In April 2017, the Washington Business Journal stated that Groupon would be laying off 30 LivingSocial employees. The 65 remaining employees are expected to leave the company by the end of 2017. The report also mentioned that Groupon is closing the LivingSocial office in Washington, D.C.


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