Last Quarter's Strikeout, Groupon Is Still a Sell

The following video is part of our "Motley Fool Conversations" series, in which senior technology analyst Eric Bleeker and Chief Technology Officer Jeremy Phillips discuss topics across the investing world.

Right before Groupon's last earnings, Eric and Jeremy published an article advising investors to sell the stock while they could. Groupon's report was coming hot on the heels of Amazon revealing that its partially-owned Groupon competitor, LivingSocial, was bleeding more cash than investors expected. That night, Groupon reported earnings and promptly fell the next morning by over 10%. Eric and Jeremy take a look back and Groupon's quarter and are actually surprised at some of the company's sales growth metrics which beat analyst estimates. However, Eric and Jeremy remind Groupon investors that the decision to cut marketing, which they believe is a bad long-term play, could take several quarters to play out. In the end, while investors punished Groupon for not being profitable in the last quarter, its greater reckoning may come a few quarters down the line when current leads curtail their buying and Groupon's lack of marketing hasn't created new "hot leads" to take their place.

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Eric Bleeker has no positions in the stocks mentioned above. Jeremy Phillips has no positions in the stocks mentioned above. The Motley Fool owns shares of Amazon.com. Motley Fool newsletter services recommend Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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