Who doesn’t love a good Groupon? Paying $15 for a $30 dinner at one of your favorite restaurants… you just can’t beat that. Groupon went public in November of 2011 and like Facebook, people had high hopes for the stock. However, since opening day, the shares have lost more than 80% of its initial value due to accounting scandals, international expansion issues, and poor business model execution. With earnings not living up to analysts’ projections, the fate of Groupon can be somewhat unclear.
Yesterday, according to Bloomberg, Groupon shares dropped more than 19 percent, which was their biggest decline since November 9, 2012. This was a result of Groupon announcing that first-quarter revenue will total about $560 million to $610 million, a vast difference in analysts’ predictions of $647 million for the quarter. Though now ex-CEO Andrew Mason recently tried to focus on retail to boost growth, demands for online discounts declined and pressure from investors and board members continued to rise. Competitors such as Living Social also do not aid the matter as they have similar offerings and programs.
Groupon’s best chance of surviving is changing its business model. Instead of offering sales through daily email advertisements, the site should serve more like a shopping mall. There, consumers can visit the site and take advantage of deals everyday instead of a 4-6 day window. Companies such as Savored, ironically a company Groupon acquired last year, has adapted this business model and have seen some success in addition to gaining a loyal customer base.
Though Groupon’s stock has a chance of bouncing back, the company will most likely have to change its business model to survive long term. By extending the length of their promotions, they allow consumers to have access to deals any time, increasing loyalty and sales.
Yesterday, according to Bloomberg, Groupon shares dropped more than 19 percent, which was their biggest decline since November 9, 2012. This was a result of Groupon announcing that first-quarter revenue will total about $560 million to $610 million, a vast difference in analysts’ predictions of $647 million for the quarter. Though now ex-CEO Andrew Mason recently tried to focus on retail to boost growth, demands for online discounts declined and pressure from investors and board members continued to rise. Competitors such as Living Social also do not aid the matter as they have similar offerings and programs.
Groupon’s best chance of surviving is changing its business model. Instead of offering sales through daily email advertisements, the site should serve more like a shopping mall. There, consumers can visit the site and take advantage of deals everyday instead of a 4-6 day window. Companies such as Savored, ironically a company Groupon acquired last year, has adapted this business model and have seen some success in addition to gaining a loyal customer base.
Though Groupon’s stock has a chance of bouncing back, the company will most likely have to change its business model to survive long term. By extending the length of their promotions, they allow consumers to have access to deals any time, increasing loyalty and sales.
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