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Groupon stock falls to $2.76, reaches new low after downgrades

Updated: December 11, 2012 6:09AM

Groupon’s stock swooned nearly 30 percent Friday, dropping to yet another all-time low of $2.76, as analysts slashed their outlooks based on the daily deals site’s disappointing earnings results and holiday forecast.

The stock price ended the day Friday down 29.59 percent, or $1.16 a share, marking its first close under $3.

The reaction was swift after Groupon reported late Thursday a $3 million third-quarter loss on lower-than-expected revenue of $591 million and showed growing dependence on less-profitable sales of discounted products at Groupon Goods.

Groupon’s core daily deal business “deteriorated further” and its loss of money in the international business was “a meaningful reversal” after it had turned a profit this year, said analyst Arvind Bhatia of Sterne Agee in Dallas, who maintained his “neutral” rating on Groupon’s stock.

Ralph Schackart of Chicago-based William Blair lowered his rating to “market perform,” citing continued declines in Groupon’s daily deals billings and increased pressure on profits from having to keep inventory of discounted goods and sell the goods at lower profits than the emailed daily deals.

The stock plunge put Groupon’s share price 86.2 percent below its initial public offering price and set its market capitalization at about $2 billion, or one-third the $6 billion that Google reportedly offered in a buyout in late 2010. Its previous lowest closing price of $3.68 occurred Nov. 1.

Groupon CEO Andrew Mason told analysts Thursday the daily deals business can still produce strong growth and that the company will “go beyond the inbox” to become an e-commerce marketplace offering deals on demand.

One-third of Groupon’s deals come from people using their smart phones and mobile devices, so personalized, location-specific deals on the fly show growth potential, too, Mason said. Groupon has already changed its home page in Chicago to let customers access whatever deal they want when they want it rather than wait for an email.

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