Groupon’s share price tumbled more than 15 percent late Tuesday (Aug. 5), as investors balked at the Chicago firm’s expensive eCommerce investments. Groupon reported a net loss of $22.9 million, which seemed far worse to analysts because, according to an analyst poll by Thomson Reuters, most analysts had forecast a $6 million profit.
Quarterly sales sharply increased 24 percent to $751.6 million, which was a good showing, had it not been for those deep investments in marketing, IT and product development. “The results marked a disappointing end to the first year of Chief Executive Eric Lefkofsky, who was named permanent CEO in June 2013 following an interim stint after the dismissal of co- founder Andrew Mason,” said The Wall Street Journal.
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A key part of the costs are efforts from the new CEO to shift the business’s focus from E-mailed daily deals to mobile campaign discounts and physical good distribution. Groupon even is trying to get into the retail POS business, to compete with PayPal and Square.
“We’re a business in transformation,” the Journal quoted Lefkofsky saying in an interview. “We’re still in investment mode. We believe we can accelerate our business.”
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