What to Make of Groupon's Recent Rally?

Andrew Tonner
Andrew Tonner
Sep 20, 2012 at 12:00AM

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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