Boston, MA 03/05/2014 (wallstreetpr) – Groupon Inc. (NASDAQ:GRPN) stock has been performing pretty dismally in the market after the company issued poor guidance for the current quarter that fell below analysts’ estimates. The company’s stock has been on a declining trend over the past four weeks, raising lots of concerns in the market. Negative earnings estimate revisions and reasons behind them have not on the other hand done any good to rescue the situation.
Groupon Q1 estimates
Groupon Inc. (NASDAQ:GRPN) on its financial report last week projected EBITDA earnings of $300 million for the current quarter completely lower compared to analyst’s estimates of $400 million. The company also expects adjusted EBITDA earnings in the current quarter to be between $20 million and $40 million against consensus estimates of $93 million. Groupon continues to emphasize that the downgrade of its earnings estimates is mainly as a result of its recent acquisition as well as increased marketing investments.
The financial outlook is raising concerns in Wall Street considering the company performed better than expected in F2013 with revenues growing by highs of 20.4% year over year to clock highs of $768.4 million.
The experienced growth in 2013 was primarily due to a 63% increase in total revenues which offset a decline in the third quarter. Groupon guidance is currently weak compared to Wall Street expectation and the expected decline in business in North America will not help altogether.
North America markets seem to be presenting the biggest challenge to Groupon considering local billings in the past year grew by low margins of 1.5% although Groupon Inc. (NASDAQ:GRPN) lowered take drives as a way of driving billings. Groupon gross margin also continue to be greatly affected by unfavorable business mix, plunging by up to 660 basis points in 2013 fourth quarter to levels of 49.2%.
Groupon Inc. (NASDAQ:GRPN) is also trying to find out why its adjusted earnings before interest tax depreciation and amortization collapsed from highs of $71.9 million in the same quarter a year ago to low levels of $29.7 million.
Groupon Inc. (NASDAQ:GRPN) has resorted to a higher marketing spending in the current quarter as a way of attracting more customers to boost sales. Latest acquisitions of Ticket Monster and ideeli are also hitting hard on the company. The company plans to reduce focus on china is seen as a negative going forward considering the market base the company will be losing.
