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Why Groupon Stock Tumbled Today

By Timothy Green - Updated Feb 14, 2018 at 1:48PM

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Revenue didn't slump as much as expected, but the bottom line disappointed.

What happened

Shares of Groupon (GRPN -4.90%) slumped on Wednesday after the company's fourth-quarter results came in short of expectations. While the top line beat analyst estimates, the bottom line wasn't quite good enough. The stock was down about 11% at 1 p.m. EST.

So what

Groupon reported fourth-quarter revenue of $873.2 million, down 3.5% year over year but about $20 million higher than the average analyst estimate. Direct revenue tumbled 10.2%, to $526.6 million, while third-party and other revenue rose 8.9%, to $346.6 million.

A slumping stock chart.

Image source: Getty Images.

In North America, the number of active customers rose by 200,000, to 32.7 million. International active customers also rose by 200,000, reaching 16.8 million. Non-GAAP earnings per share (EPS) came in at $0.07, missing analyst expectations by $0.02. Gross profit rose 6% in North America and 21% in international markets.

"In 2017, we made progress in creating a better customer experience that removed friction for our customers while also maximizing gross profit. We are excited to build on this success in 2018, combining our growing mobile penetration and platform power to ultimately become the daily habit in local commerce for customers and merchants," said Groupon CEO Rich Williams.

Now what

For 2018, Groupon expects operating income between $25 million and $35 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) between $260 million and $270 million. That compares with $29.4 million of operating income in 2017 and $249.9 million of adjusted EBITDA. Analysts were expecting adjusted EBITDA guidance of $271.7 million.

With revenue moving in the wrong direction and the bottom line falling short of expectations, it's no surprise the stock is losing ground following the company's fourth-quarter report. Wednesday's move lower wipes out some of the stock's 54% gain in 2017.

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