Wall Street PR

Tumbling Groupon may ask Mason to move on – GRPN, GRMN, DELL, EBAY, AMZN & OSTK

Boston, MA 03/01/2013 (wallstreetpr) – Groupon Inc (NASDAQ:GRPN) shares took the biggest dive since November after its projected sales missed estimates and added to Chief Executive Officer, Andrew Mason’s woes. The company board has been considering letting him go. Since then Mason has been focusing on retailing in an attempt to boost profits as the allure of online discounts is losing its sheen. Investors and the Groupon Inc (NASDAQ:GRPN) board have been breathing down his neck since November 2012. Though he was supposed to be ousted then, the directors eventually decided to give Mason the chance to prove himself and wait a few quarters longer before replacing him.

Switching gears not helping much

Mason has been working relentlessly on switching modes from coupons to retailing but analysts have said that the effort has not borne fruit, the situation remains unchanged and that company expectations have not been met. Even as the pressure on Mason becomes more tangible, Groupon Inc (NASDAQ:GRPN) shares dropped to $4.83 by 19 percent and had touched the biggest inter-day decline of $4.24 earlier. Groupon had estimated its first quarter revenue to rise to $610 million from $560 million while the average analyst estimate had been $647.7 million.

The fourth quarter analyst estimate of $640.2 million had also not been reached as the company sales managed to pull in only $638.3 million. The net loss for the same quarter increased to $81.1 million at 12 cents per share from the 12 cents or $64.4 million that it stood at, a year earlier. Groupon Inc (NASDAQ:GRPN) made sales worth $492.2 million in 2011. Market analysts have stated that though the company is taking a step in the right direction it is going to be a while before the transformation from them being a daily deal set-up to a full-fledged Ecommerce engine takes place. Groupon Inc (NASDAQ:GRPN)’s stock had reduced by 70 percent since the company’s IPO in Nov 2011.

Groupons business

The company’s main revenue is generated from offering discounts. These are called Groupons and cover numerous businesses. Local salons, restaurants and stores offer customers discounts via the coupons that Groupon Inc (NASDAQ:GRPN) advertises and the business largely depends on word of mouth. The revenue that is generated from the promotions is then shared with the various businesses. A service named Groupon Goods was launched in 2011 to help retail businesses such as Dell Inc (NASDAQ:DELL) and Garmin Ltd (NASDAQ:GRMN) to sell the thousands of products that had been marked down. These two-day sales were targeted at customers looking for good deals and provided the concerned companies with quick sales in a very short period of time.

Honeymoon period over

With the holiday-shopping season blowing over, E-commerce sales are slowing down and the current quarter is going to be no better in this aspect than the previous one said Jason Child, Groupon Inc (NASDAQ:GRPN) CFO. A prominent analyst said that the company is still experimenting with the right recipe for success and testing which goods cut the mark and which don’t. Groupon is now in straight competition with retailers like eBay Inc (NASDAQ:EBAY), Amazon.com, Inc (NASDAQ:AMZN) and Overstock.com, Inc (NASDAQ:OSTK) who have a stronger foothold in the online market.

Shares of Groupon Inc (NASDAQ:GRPN) went down by 24.28% to close at $4.53

Shares of Garmin Ltd (NASDAQ:GRMN) went down by 0.92% to close at $34.36

Shares of Dell Inc (NASDAQ:DELL) went down by 0.22% to close at $13.95

Shares of eBay Inc (NASDAQ:EBAY) went up by 1.03% to close at $54.71

Shares of Amazon.com, Inc (NASDAQ:AMZN) went up by 0.39% to close at $264.27

Shares of Overstock.com, Inc (NASDAQ:OSTK) went down by 0.85% to close at $11.62

Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).