Groupon (GRPN) is taking its discounting prowess too seriously.
Shares of the daily deals leader took another hit on Monday night after posting disappointing quarterly results.
Groupon reversed a year-ago deficit to deliver a welcome profit of $0.04 a share, but revenue climbing 45% to $568.3 million fell short of the $573.1 million that analysts were targeting. The company argues that revenue would have climbed 53% if it wasn't for foreign exchange fluctuations. But there's also another way to view the flash sale giant's top line shortcomings.
Groupon recently began offering physical merchandise through its Groupon Goods initiative. The ability to purchase marked-down fleece blankets, noise-cancelling headphones, or media players is an appealing addition to the Groupon model. But If you back out the $65.4 million in direct revenue that the company booked in its latest quarter, revenue itself would've only inched 28% higher.
If you think that's bad, it gets worse.
Revenue grew just 2% sequentially during the second quarter, and would've declined 7% if you back out the direct revenue booked in both periods.
There will come a time when the market warms up to Groupon as a value play. The company is still growing, and it serves up deals from 100,000 different merchants to its 38 million active customers. Plus Groupon's guidance calls for another operating profit this quarter on a 35% to 44% revenue spurt. And it's also hard to knock a balance sheet that's flush with $1.2 billion in cash and no long-term debt.
However, it's also hard to get excited about a company that went public at $20 late last year only to shed roughly two-thirds of its value.
The stock itself has been discounted further down than many of the company's deals, but that still doesn't make Groupon a bargain.
Other Things Worth Watching
• The market wasn't impressed with Monster Beverage's (MNST) quarterly report last week, so the company behind the adrenaline-boosting Monster Energy drink is eating more of its own cooking. Monster Beverage waited until after market closed on Monday to reveal that it would be doubling the size of its share buyback plan to $500 million.
• The streak was fun while it lasted. The S&P 500 closed marginally lower on Monday, snapping a string of six consecutive trading days of positive gains. Six days may not seem like much, but it was actually the longest streak since late 2010. Bulls are hoping that a new streak begins on Tuesday.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. Motley Fool newsletter services have recommended buying shares of Monster Beverage.