Signaling another bad omen for the health of the daily deals industry, today was Bloody Wednesday on Wall Street for Groupon.
In today’s trading session, Groupon lost nearly one-quarter of its total market value. The sell-off was sparked by the company’s earnings miss and the outcome of Groupon’s decision to take a smaller cut of revenue on daily deals. Reuters reports that investors are now punishing the former daily deal giant for “sacrificing revenue and profits to attract and keep merchants.”
Chicago-based Groupon shares tumbled to $4.65 in after hours trading today.
“This raises questions about how these guys are going to be able to scale the business,” said Tom White, an analyst at Macquarie. “The forecast is underwhelming.”
But Chief Financial Officer Jason Child said that his company’s strategy is focused on the long term and anything that will cultivate growth is good for business at the present.
“We are focused on driving growth,” Child admitted. “We will make the investments we feel we need to optimize for growth and merchant profitability.”
The company also forecast first-quarter revenue of $560 million to $610 million, which is well below the $650 million average estimate of analysts.