Aug. 13 - Groupon shares hit an all-time low in after hours trading Monday after it reported a revenue miss, blaming Europe. Bobbi Rebell reports.
Groupon specializes in slashing prices with its daily deals, but its stock price is where the real cutting has been going on. Shares plummeted 20 percent to an all-time low in after hours trading Monday after it reported a quarterly revenue miss. Profit forecasts were weaker than expected. The company blamed weakness in Europe. Groupon went public back in November at $20 a share- but after a brief wave of optimism shares had lost more than 60 percent of their value by Monday's close. Villanova University Associate Professor Tony Catanach has been writing about Groupon on the blog Grumpy Old Accountants: SOUNDBITE: TONY CATANACH, ASSOCIATE PROFESSOR, VILLANOVA UNIVERSITY (ENGLISH) SAYING: "The market clearly doesn't like this stock and I think it's primarily because of concerns over the longevity of their business model, because of the extreme competition, and low barriers to entry and I think the other significant component is the fact that they just have concerns about the accounting quality- the believability of the reported amounts." The company's accounting has been controversial and heavily criticized. For example: at its daily deals business- the company only reports its cut of the sale, usually between 20 and 40 percent- as revenue- because it's just the middleman. At its new Groupon Goods business, when it takes inventory of the products- it's been reporting 100% of the revenue generated by product sales. According to Catanach, it's still not clear how revenue is counted with the Groupon Goods business if they don't take possession of the products. And the accounting questions remain a distraction to their business challenges: SOUNDBITE: TONY CATANACH, ASSOCIATE PROFESSOR, VILLANOVA UNIVERSITY (ENGLISH) SAYING: "Even in my small community where I live there is local discounters popping up right and left so it's an easy, replicable model to do. Now the question is - can they distinguish themselves through the use of technology and that's a big if." Groupon says it is rolling out new technology in Europe - but that it will take the balance of the year. Bobbi Rebell, Reuters.