Shares fall to an all time low since public offering in November
Groupon stocks have hit its lowest level Wednesday since the company went public last November. Concerns regarding the low stocks come from the decline in traffic to the site and the influence Europe’s weak economy.
ComScore, Internet trends tracker, said Groupon traffic has declined 15% in June from last year. Last month, Groupon.com had 12.2 million unique visitors—down from 14.5 million back in June 2011.
Mark Mahney, a Citi Investment Research analyst, has expressed some concerns about Groupon’s exposure to Europe’s weak economy. A quarter of the company’s revenue comes from Europe. Mahney states that the combination of this and uneasy exchange trends, will weigh in heavily on the company’s expected earnings for the second quarter.
There is some skepticism that current decline in share prices are possible effects of “more fundamental flaws” within the business. Aaron Kessler, Raymond James senior research analyst, said, “There is investor concern over the sustainability of the model…consumer and merchant fatigue.”
Despite not being able to top analyst estimates for the April-June quarter, Wall Street expectations are more “reasonable.” From a FactSet poll, analysts are expecting revenue of $576.5 million, with expected earnings of 3 cents per share. Groupon target price has gone down from $22 to $19. Groupon shares fell 54 cents—6.5%, closing at $7.77 on Wednesday, just barely making it above its all time low of $7.72.
Groupon is known for selling spa and restaurant packages at a discounted price.