Daily voucher company Groupon has reported a sizeable loss of $42million in its first results since flotation on the stock exchange in November 2011.
Boo hoo for Groupon: Who’s fudging this deal?
The company blamed the fourth quarter losses on a massive $34.8m tax bill on some of its international business, claiming an effective tax rate of approximately 1,600%.
Shares in the company fell 13% in subsequent trading, although they still remained marginally over the $20 initial value at $21.35.
Groupon, once the fastest-growing company in the world with the biggest internet IPO after Google, has characteristically downplayed the results, with CEO Andrew Mason stating that it has still been a “phenomenal growth year” for the company.
But there’s no doubt that, as well as high marketing and customer retention costs of a reported $351 million, an endless stream of cloned competitors has hit Groupon hard – especially successful copies that the company has been forced to buy back at a massive premium each.
In 2010 the company chose to buy up the Rocket Internet clone CityDeal for €750m in cash and shares – a move that made the Samwer brothers $1.02 billion when the Groupon went public. Oliver and Marc Samwer were subsequently made consultants on Groupon’s international business. Google also moved into the German market, buying up another competitor, DailyDeals.
But could Groupon’s policy of keeping its enemies close have cost them dearly? Or is the market simply over-saturated with deal-style coupons? Have your say below…