Groupon Is Getting Crushed

After last night’s earnings performance, Groupon’s stock is getting slaughtered.

It’s off 23% this morning, sending the stock down to $5.80 a share. The company’s market cap is down to $3.8 billion.

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Photo: Screenshot

The stock is tanking because “gross billings” were down significantly on a sequential basis. Gross billings are a shorthand way to measure the company’s core coupon business.

(It’s worth noting that Groupon PR says billings would have been flat if not for a strengthening dollar, which knocked $75 million off international gross billings.)

chart of the day, groupon gross billings, aug 2012

When Groupon sells a coupon, it books the full price of the sale for its “gross billings”. What it actually¬†keeps of the sale is its revenue.

That revenue gets mixed with other lines of business, like Groupon Goods. Groupon Goods are full priced items, which means you can generate more revenue selling fewer items.

As you can see here, revenue is up nicely (thanks to Groupon Goods), as are profits, but that doesn’t matter anymore to investors. They are worried about those gross billings and the erosion of Groupon’s core business.

chart of the day, groupon revenue and loss, august 2012

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