Layoffs, Plummeting Stock Prices Mark The Autumn Of Groupon's Discontent

By Chuck Sudo in News on Nov 9, 2012 6:40PM



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It’s been a little over a year since Groupon became a publicly traded company and, judging from the stock price alone, it’s been largely downhill since they raised that initial $700 million in their IPO.

Groupon stock sank to a new low of $3.30 per share Thursday in after hours trading after the company reported third quarter earnings below analyst forecasts. Groupon earned $568.6 million in revenue last quarter, below Wall Street’s projected $591 million. Groupon's stock price dropped below $3 a share in late morning trading today, to $2.87.

Groupon’s earnings losses were across the board: gross billings, international revenue and cash operations were all lower last quarter. Groupon blamed much of their performance on exchange rates. But the stock price has been on a steady decline since spring, when the company revised its initial financials and has consistently had to defend its accounting methods with the SEC. Groupon stock is now so low that even mutual funds can’t dump them fast enough.

Groupon also continues to shed employees. The company announced the layoffs of 80 employees Thursday and has cut its overall workforce by over 550 employees from the second quarter through yesterday’s announcement. Groupon’s labor-intensive sales force has been seen as one of the company’s major detriments to its stock performance by investors.

Yet no matter how dark the clouds get over Groupon’s head, they’ll always have a cheerleader in NBC Chicago’s David Wolinsky.

It might be tempting to characterize the company's current state as "collapsing." But I don't think that's what's really going on here. Sure, it's struggling, but it's when you're pushed to your limits that you usually dig down and try something new. You get desperate. You either change your strategy or you stay the course. And Groupon has stayed the course long enough now to, hopefully, know it needs to try something new. --snip— Although some are speculating Groupon could swoop in post-Sandy to become a way to help get people's mind off the disaster [http://wallstcheatsheet.com/stocks/could-groupon-help-consumers-post-sandy.html/] in the effected areas. Who knows. But Groupon has announced it has delayed certain deals in the Northeast markets "unless merchants contact the company to confirm they still want to run the offers."

Maybe it's just a week or a handful of days where everyone's not exactly at their best.

“A week or a handful of days?” Groupon stock has fallen almost from the day after its IPO, and has been on the verge of collapse for months. as for trying something new, all groupon has done since their stock price started tanking has been to re-hash their "pay day loans for small businesses" model with offshoots like Groupon Goods and groupon Getaways. Maybe it’s time for Wolinsky to stop carrying Groupon’s water and start looking at the bigger picture.

