Shares of Groupon (Nasdaq: GRPN) hit a 52-week low on Thursday. Let's look at how it got here and whether dark clouds are ahead.

How it got here
Looking at today's trading volume of 3.5 million, it looks like the deal for Groupon shares is on! Unfortunately, instead of getting half off at a local Italian eatery, you'll end up with nothing but sleepless nights and portfolio underperformance if you buy in.

Shares have now traded even lower than they did in April, as the daily dealer reported earnings in May. Investors actually cheered in the wake of the release, sending shares as much as 27% higher intraday. Revenue soared 89% to $559.3 million, while gross billings similarly skyrocketed 103% to $1.35 billion. But all those gains weren't enough to translate into black by the time you reached the bottom of the income statement, instead resulting in a net loss of $3.6 million. (Nasdaq: AMZN) investee LivingSocial also recently confirmed: The daily deals business simply stinks.

How it stacks up
Let's see how Groupon stacks up with its larger rivals.

GRPN Chart

GRPN data by YCharts

We'll include some fundamental metrics for additional comparison.



Sales Growth (MRQ)

Net Margin (TTM)


Groupon 3.0 89.3% (10.0%) (52.7%)
Google (Nasdaq: GOOG) 4.8 24.1% 27.1% 19.6% 2.0 33.8% 0.9% 7.7%
Microsoft (Nasdaq: MSFT) 3.5 6.0% 32.0% 38.2%

Source: Reuters. TTM = trailing 12 months. MRQ = most recent quarter.

All three of these heavyweights have jumped into the daily deals business, along with countless local start-ups. Amazon invested in LivingSocial, Google started Google Offers, and Microsoft opened up MSN Offers. Those companies are worthy contenders, although they focus on their segments that are actually profitable.

What's next?
Groupon has little hope of turning enviable top-line growth into sustainable net income growth while it has no competitive advantage beyond a catchy name and competition springs up all around it with entrants eager to lose money. Groupon has much more pain in store.

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Fool contributor Evan Niu owns shares of, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Microsoft, Google, and Motley Fool newsletter services have recommended buying shares of, Google, and Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. The Motley Fool has a disclosure policy.

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