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Groupon shares plunge as it reports 4Q loss

February 08, 2012|By Wailin Wong
  • Groupon shares fell after the daily deals site reported earnings.
Groupon shares fell after the daily deals site reported earnings. (Associated Press )

CHICAGO — Groupon Inc. reported quarterly earnings as a publicly traded company for the first time on Wednesday, posting a net loss of $42.7 million for the fourth quarter of 2011, narrower than a net loss of $378.6 million in the fourth quarter of 2010.

The Chicago-based daily deals company said revenue totaled $506.5 million in the fourth quarter, nearly triple revenue of $172.2 million in the year-earlier period. Gross billings, which represents the total amount Groupon collects before paying merchants their share of deal proceeds, tripled to $1.25 billion from $415.3 million in the fourth quarter of 2010.

Groupon noted that its operating income totaled $15 million in the fourth quarter, reversing an operating loss of $336.1 million in the year-earlier quarter. This was the company's first quarter of operating profitability since kicking off international operations in the second quarter of 2010. Groupon said less mature international markets generated losses of more than $40 million, impacting operating results for the fourth quarter.

Markets reacted unfavorably to the earnings report. Groupon's stock, which had ended the day 1.6% higher at $24.58, was diving 12% in after-hours trading to $21.63.

Chicago-based Groupon made its debut on the Nasdaq in early November, raising $700 million in an initial public offering that gave the company a valuation of $12.76 billion. Since disclosing financial information in the run-up to its IPO, Groupon has battled a barrage of skepticism over the sustainability of its business model and its ability to turn a profit. It reported a net loss of $10.6 million in the third quarter.

The daily deal industry, which Groupon pioneered, remains a highly fragmented industry that continues to consolidate or push players out of the business. According to industry tracker Daily Deal Media, the total number of deal sites worldwide fell 7.6 percent during the second half of 2011 to 9,675. Groupon appears to have a significant lead over its rivals, including LivingSocial, a company in which Amazon is an investor. According to Amazon financial data, LivingSocial has about 60 million subscribers and saw a net loss of $558 million for the full year ended December 31.

Groupon reported earnings after the market closed Wednesday. Its shares ended the day 1.6 percent higher at $24.58. Since going public, the company has seen its stock price fall below the $20 IPO price. Shares rose last week after Facebook filed to go public, a move that lifted a number of other technology stocks.

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