Groupon’s announcement that its revenue and earnings were lower than what it reported in February is sparking fresh worries about the young company’s business model.
Trouble arose when the online deals company said late Friday that it had to revise its previously issued fourth-quarter results to increase the money it set aside for refunds to customers. A big reason: It is selling more expensive deals, such as vacation packages, which have higher return rates.
Investors responded by selling Groupon’s stock on Monday, and shares fell 17 percent. Some analysts are wondering if Groupon will be able to leave behind its growing pains.
“We believe Groupon is now a ‘show-me’ story, where a company’s ambitions are higher than the level of its internal planning and controls,” said Jordan Rohan, an analyst with Stifel Nicolaus. He downgraded the company’s stock to “Sell,” from “Hold.”
Associated Press
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