Groupon's stock is at $7.30, which, well, ain't exactly great. Even objectively speaking, if you were thinking of scooping up a bunch of Groupon stock, how confident would you be that the company will weather this storm and turn things around?
As CNBC points out, "Groupon's stock has been in a freefall ever since reaching its six-month high in February of $25.84. Since then, it has lost 67 percent after closing on Tuesday at a price of $8.31, and traded below $8 a share for the first time Wednesday — with no meaningful signs of slowing down. It seems that investors are beginning to realize that while Groupon is indeed a nice concept, it’s just not a sustainable business."
The company, obviously, has never come out and said that itself. But it has been making some concessions alluding to this, with its scattered attempts to shake things up across the globe, be it selling physical goods, opening a store in Singapore and tucking its customers into bed. As the stock indicates though, these efforts aren't paying off, yet. Companies are like giant oil tanker, so, understandably, it'll take some time for the course to be corrected. The big question is, though: What is Groupon's direction, exactly?
Again, from CNBC:
For this reason, I believe it would be a huge surprise if there is not a bankruptcy filing by this time next year from Groupon. Moreover, I don’t see it becoming an acquisition target either, because, as noted, not only does it lack any competitive advantage but it’s extremely low profit margin all but assures a path towards obscurity. Not to mention it would cost nothing to recreate (from scratch) what Groupon currently has.
What's more, the Washington Post is reporting that "traffic to Groupon declined 15 percent in June from a year earlier." It's unclear if this data also includes people using Groupon's mobile apps, which has been a major point of focus for the company, especially lately.
So, is Groupon being walloped by a one-two of customers moving on and it not being sure how to keep the ones that are sticking around? That's entirely possible.
On the other hand, when things get desperate, that's when Hail Mary moves might just save the day. But, well, the thing is, Groupon might just be trying to change too much too quickly. CEO Andrew Mason has made overtures to indicate the company will grow up – and then only two shareholders from the general public showed up at the shareholders' meeting.
There's a disconnect going on here.
And if nothing else, what happens from here will be interesting and a case study in the group-dealing world.
David Wolinsky is a freelance writer and a lifelong Chicagoan. In addition to currently serving as an interviewer-writer for Adult Swim, he's also a comedy-writing instructor for Second City. He was the Chicago city editor for The Onion A.V. Club where he provided in-depth daily coverage of this city's bustling arts/entertainment scene for half a decade. When not playing video games for work he's thinking of dashing out to Chicago Diner, Pizano's, or Yummy Yummy. His first career aspirations were to be a game-show host.