What to Make of Groupon's Recent Rally?

Groupon (Nasdaq: GRPN  ) spiked 10% on Wednesday due to news that it's rolling out a mobile payment service. Still, since going public, the company has lost 70% of its overall value — and, until yesterday, that number had been at 80% for some time.

In a recent independent survey, only 16% of Groupon customers rated themselves as "very satisfied," with 53% "satisfied." Those numbers aren't impressive, and merchants and business owners are even less pleased with the service. It seems that Groupon deals simply don't bring in high-quality customers -- they tend to be one-timers who spend less and aren't as loyal, and are basically in it only for the deal. With both customers and merchants largely dissatisfied, it's another sign that Groupon's business model is severely flawed at its core. The company's new mobile payment service won't be enough to save it in the long run. 

 

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Andrew Tonner has no positions in the stocks mentioned above. You can follow Andrew and all his writing on Twitter at @Andrew TonnerAnand Chokkavelu has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. 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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