Groupon stock is falling drastically after unexpected fourth-quarter tax loss. Groupon is a daily deal site that offers its customers up to 50% off on something bought by ahead of time. This can be anything from a ski trip, spa resort, or even a dinner on the town. The loss of two cents a share compared with a $.53 a year earlier is something positive. Although revenues increased to $506 million, the profit has not showed enough to make investors happy.
Before their stock went public in 2011, Groupon was offered a $5 billion deal by Google. People to this day still wonder why they didn’t take that deal knowing it was free money up front. Although their market capitalization is at over $15 billion, it does not mean that they have that kind of money in the bank. Expanded in over 47 countries and with the new headquarters in Switzerland Groupon still feels like they can keep expanding in markets all around the world.
Groupon membership rose to 33 million members in the fourth quarter. The company has decided to reduce marketing efforts in the coming year to try to reduce costs. Between hiring new developers and analysts as well as the needed technology, expenses have increased across the board. This is something to be expected with any company that is growing at this rate.
The biggest thing for Groupon has been the overseas growth tripling international sales to $318 million from $83 million the year earlier. This is huge for any company that’s trying to expand globally. Although these sales numbers and revenue numbers are amazing on paper with the amount of expenses that these companies hold it still makes you wonder how they will become fully profitable. Over time this market will start to diminish causing sales to go down. Groupon needs to find a way to increase its sales and make new markets. This will be a never-ending battle for companies such as Groupon and living social.
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