Groupon features a daily deal on the best stuff to do, see, eat, and buy in Seattle and a variety of other cities across the United States.
Groupon Stocks Drop 12% While Customers Demand Refunds
Groupon and the daily deals business model goes on a see saw ride every few months it seems. This time round the company is suffering with stock price falls in wake of customers increasing their complaints and asking for refunds.
Wall Street didn’t like news of declining 4th quarter revenues for Groupon and this set the stock plunging 12%. This is of course terrible news for the company and the industry as a whole because many had hoped that the Groupon IPO and subsequent growth would give the model the maturity and credibility it so desperately needs.
But when customers who get a daily deal are asking for refunds there isn’t much that a company like Groupon can do—even if it has a market capitalization of $8 billion. We mustn’t forget that merchants who take part in Groupon offers suffer losses in most cases on the front end, in order to gain a long term customer on the backend.
It doesn’t help too that analysts at Merrill Lynch have been bearish on the stock. According to Justin Post, “Groupon has been our most disappointing call in 2012 as we thought 4Q margin upside, a rebound in 4Q take rates, and data suggesting an improving competitive landscape would improve sentiment on the stock.”
Clearly uncertain days ahead for the stock, but there might be hope. The US economy has been showing signs of life recently and this may give some added volume to companies like Groupon.