Groupon Falls as Expenses Mount Amid Daily-Deal Fatigue

Groupon Inc. (GRPN), operator of the biggest daily-deals website, fell the most in more than a month on concern that marketing costs are rising amid waning consumer interest in online coupons.

Shares of Chicago-based Groupon dropped 9.9 percent to $4.75 at the close in New York, the biggest decline since Aug. 14. The stock has tumbled 77 percent this year.

As the discount service expands marketing efforts and gains a greater portion of revenue from Groupon Goods, an e-commerce site for marked-down products, “we see overall margin expansion and cash flow growth as tenuous,” said Ken Sena, an analyst at Evercore Partners Inc. (EVR), in a research report. He recommends selling shares and has a $3 price estimate.

“Marketing expenses are on the rise given daily-deal fatigue,” Sena wrote. Paul Taaffe, a spokesman for Groupon, declined to comment on the note.

The company makes money by selling discounts -- known as Groupons -- from businesses such as restaurants and nail salons. It then splits the revenue with the retailers. Last month, Groupon reported second-quarter revenue that missed estimates because of economic weakness in Europe.

Groupon Goods made up most of the company’s $65.4 million in direct revenue, which more than tripled from $19.2 million in the first quarter, the company said last month.

To contact the reporter on this story: Lisa Rapaport in New York at

To contact the editor responsible for this story: Tom Giles at

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.