Daily deal site Groupon stock is on the downside as competitor Living Social are now on their heels. It seems Groupon’ss growth has slowed down since last year and investors are not pleased.
Though District-based LivingSocial has faced less scrutiny as a private company, analysts say that Groupon’s woes have a direct impact on perceptions of the company’s value when it inevitably goes public or looks to raise more capital.
“In order to change that view, LivingSocial would have to show significant profitability and a differentiated consumer offering,†said Jordan Rohan, a managing director at Stifel Nicolaus. “That’s what LivingSocial is trying to do.â€
LivingSocial has sought to separate itself from Groupon, in part, by hosting one-time events, such as beer festivals and sushi-making classes, and constructing a multipurpose activity venue at 918 F St. NW.
But at a media day in June, the company said the vast majority of its revenue still flows from the daily deals business, with its discounted travel getaways contributing the second largest amount. Groupon offers similar services.
“From an investor perspective, the valuations are certainly going to be tied together because there is no other comparison and Groupon is the biggest, so why would they not be linked?†said Benchmark Company analyst Daniel Kurnos.
Groupon’s growth has been slower than many Wall Street analysts expected, yet the Chicago-based company turned a profit in its most recent quarter. The firm posted operating income of $46.5 million for the second quarter, up from a loss of $101 million during the same period last year.
LivingSocial posted a net loss of $93 million during the same quarter, an improvement from a $198 million loss during those three months in 2011. The finances were disclosed in a regulatory filing by Amazon, which owns a 29 percent interest in the co
[washingtonpost]
