Groupon Inc. (NASDAQ:GRPN): Weak Guidance Failed To Retain Investor Confidence

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Dallas, Texas 05/09/2014 (FINANCIALSTRENDS) – Groupon Inc. (NASDAQ:GRPN) released its 1Q14 earnings on Tuesday May 6, 2014 following which the stock plunged as much as 20% during Wednesday’s trade, largely attributed to the weak guidance posted during 1Q14 earnings release. Even analysts did not take much time to cut their price targets for the stock. Investment analysts at Wunderlich cut the price target to $10 from their previous target of $13 and analysts at Morgan Stanley also cut the price target to $9 from their previous target of $13.

However, yesterday the stock regained to some extent and closed at $5.66, gaining 6.10% from its previous close. The stock traded with considerably high volumes of 30.59 million shares against its 30 day average volume of 19.60 million shares. The stock is down almost 50% year to date.

Outlook:

Groupon Inc. (NASDAQ:GRPN) forecasted revenues in the range of $725 – $775 million for 2Q14 as it expects relatively flat local billing growth in North America during the second quarter on a sequential basis. The company also noted that North America billings may accelerate post-2Q14 and may achieve double digit growth by the end of this year.

The company anticipates steady progress in the Europe, the Middle East and Africa region throughout FY14. The company anticipates EBITDA in the range of $45 – $65 million for 2Q14 with earnings of $0.01 – $0.02 per share. However, Zacks Consensus Estimate is of ($0.02) per share.

1Q14 Highlights:

Groupon Inc. (NASDAQ:GRPN) reported 26% year over year growth in its revenues during 1Q14 which stood at $$757.6 million, beating the Zacks Consensus Estimate of $734 million. The company reported 1Q14 loss of $0.04 per share which was also better than the Zacks Consensus Estimate of $0.07 per share. However, gross margin decreased on a year over year basis to 50.9% from 63%, largely due to unfavorable business mix.

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