Groupon Inc., the online deal company, suffered a big blow on Wednesday afternoon in after-hours trading after the Company came short on beating revenue expectations. The Company posted a bigger than anticipated fourth-quarter loss and weaker than expected revenue outlook. Shares sank more than 25% in after-hours trading with the stock hitting as low as $4.41. Missing revenues is a negative sign, especially if the Company has reported a weaker outlook for first quarter revenues.
Groupon booked a loss of $81.1 million from October to December, or 12 cents a share, compared to $65.4 million, also 12 cents a share, in the fourth quarter of 2011. 12 cents a share is significantly higher than the 2 cents a share that analysts had expected, according to FactSet.
Revenue rose 30 percent to $638.3 million from $492.2 million, a little shy of the $639.8 million that Wall Street expected. For the current quarter, Groupon expects revenue of $560 million to $610 million, while analysts expected revenue of $646.8 million.
Gross billings however did increase 24 percent in the quarter to $1.52 billion from $1.23 billion a year earlier. Andrew Mason, CEO of Groupon said, “Record billings growth this quarter is a clear signal that customers love Groupons. We will continue to invest in growth through 2013 as we see new opportunities to give our customers what they want.” Last year analysts speculated that Mason may have fallen out of favor with the board though a company spokesman said Mason remained in charge.
The Company has been dealing with problems with European merchants who have complained that Groupon takes too large a cut of online offers. Groupon is attempting to fix the problem by cutting the size of discounts on deals there and testing faster payments to higher-quality merchants. During a conference call with analysts, Groupon executives have fore-casted long-term take rates of 30-40% for the daily deals business.