Wednesday, August 24, 2011

DealChicken | Groupon's 'rapidly' slowing growth

As Gannett pushes forward with its later-to-the game online coupon site DealChicken, brokerage Wedbush Securities notes that industry leader Groupon's second-quarter revenue growth slowed dramatically, spurring a 20% plunge in the company's value.

The Wedbush figures, released yesterday, come as Groupon readies plans to take itself public; the Chicago-based company filed a so-called S-1 registration statement with government regulators in June, saying it hopes to raise $750 million in an IPO.

Yet, in a research note to investors, according to this Reuters story, Wedbush warned: "Groupon's recently amended S-1, indicating rapidly decelerating Q2 growth, did little to help drive investor interest in the shares.''

Second-quarter revenue at the company, which offers group-buying deals on everything from spa treatments to flying lessons, was up 36%, down from the 63% increase it posted in the first quarter, Reuters said.

Groupon's market valuation has dropped 20%, to $16 billion, in the latest private auction of shares, according to Wedbush.

To be sure, slowing growth doesn't necessarily spell the end of a company's prosperity. That's because it's difficult to maintain the same growth rate on larger and larger revenue bases.

Still, Groupon's trend comes amid GCI's national rollout of DealChicken, which formally launched a month ago, and is aiming for more than 50 U.S. markets by year's end. Hundreds, even thousands, of other coupon site start-ups also are entering the crowded market.

GCI is hiring dozens of new employees for DealChicken as revenue continues to slide, especially in the company's biggest division, U.S. newspapers. During the second quarter, overall revenue fell 2.2% on an even steeper 6.5% ad revenue drop among the newspapers.


  1. Does each site going live with DealChicken get 2 staffers from corporate to run it?

  2. Why is Gannett pushing DealChicken, but also has advertising for Groupon on the USA Today website? Counter productive, right?

  3. If I was running Gannett, I would have bought Groupon when it was a small startup, and spun it off in an IPO a year ago as the markets were responding to QE2 when I saw hundreds of competitors. Profits to the bottom line.

    But Gannett execs are too clueless to see the wisdom in that. There's no new buzzwords to throw out in that strategy.

    Ever notice how Warren Buffett never talks in buzzwords?

  4. This last comment would have been more impressive had it been posted in 2009. Also, Gannett should have bought Microsoft, Apple and Google. Aren't they so totally clueless?

  5. Answer to first question is yes

  6. Groupon turned down Google's $6 billion offer. Gannett can't play in that ballpark. If the Groupon business model works, so will Deal Chicken.

  7. Groupon is on the decline:

    So deal chicken is a bit of a dead duck already.

  8. 10:07 am, thanks for the answer. That means about $60K to $100K of salaries and benefits per site. It seems to me that would take a boatload of deals to just cover the overhead.

  9. This comment has been removed by a blog administrator.

  10. Deal Chicken? ... really? Deal Chicken? Pathetic. All from the folks who haven't had an original idea since Al Neuharth's plaid suits.
    Shareholders are you listening? Fire these bums and thieves.


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