Over the years, deals platform Groupon Inc Common Stock (NASDAQ:GRPN) has struggled to grow its business but things seem to have turned around a bit in recent times. This past Friday, the Groupon stock soared after its financial results for the second fiscal quarter proved to be a bit of a surprise for the markets.
Strong Come Back
The company did not actually perform impressively but its results were not as bad as analysts had expected and that resulted in a 47.9% rally in the stock as investors piled on to it. In this sort of situation, it could be worthwhile for investors to take a closer look at Groupon and its second-quarter performance.
Prior to the earnings announcement, analysts had projected that Groupon was going to generate losses of $2.75 a share and its total sales were going to be near about $200 million. However, the company managed to spring a major surprise. The loss per share came in at only $0.93 and the total sales for the period touched as much as $395.6 million.
The sales figure surpassed analysts’ expectations by near about 100% and the rally in the stock did not come as a real surprise for most. However, at the same time, it should be noted that there is likely going to be a lot of interest in the Groupon stock this week and it remains to be seen if it can continue to add to its gains following the stellar performance on Friday.
The elation from among investors is understandable. At the end of the day, the company managed to spring a major surprise and such a performance can often lead to significant rallies. That being said, Groupon still ended up suffering a loss and that has to be looked into as well. On the other hand, if one looks closer into the loss per share of $0.93 per share, a different picture begins to emerge.
The company had announced that a figure is a Pro-forma number but when the losses were calculated as per generally accepted accounting principles (GAAP), the loss per share came in at $2.53 a share. That is a figure that is not too far away from the $2.75 loss per diluted share that had been predicted by analysts.
In addition to that, while it is true that the company’s sales figure was considerably impressive when compared to Wall Street expectations, investors should note that the total sales of $395.6 million still worked out to a drop of 26% year on year. While all this is true, the optimism among investors could be due to the fact that they believe that in the long term, Groupon is going to continue to reduce its losses.
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