On Wednesday Groupon (GRPN) announced their second quarter earnings. The stock market reacted quite favorably sending the stock up 22% in a single day. That is quite the dramatic recovery for a company with a pretty solid record of missteps with the financial community. This is why the stock is moving.
- Groupon named co-interim chief Eric Lefkofsky as its permanent CEO and named the other interim chief, Ted Leonsis, as chairman. This greatly reduces uncertainty and adds stability.
- Mr. Lefkofsky is quite proficient at messaging. He communicates in easy to understand phrases that investors and normal people understand.
- In Groupon’s core North American market, sales rose 45% to $377.2 million,
- This sales growth is being driven in part by a business model shift away from pushing deals to email subscribers toward becoming a marketplace where users can find deals when they want them. While Groupon has stopped using the word clone, they are in fact copying the nCrowd model (and I am pretty sure they are aware of us and understand the leverage of our model) of having longer term offers in an ecommerce store, which they call Deal Bank. Going from a daily deal to a deal marketplace is a huge change.
- Mobile is also driving this growth with nearly 50% of sales coming from mobile. The financial markets are fond of mobile right now.
- The company met or beat Wall Street expectations for the second quarter a row after several misses. In the tech world public company misses get punished greatly and exceeding expectations is well rewarded (this BTW is something that a good executive team can manage, indicating to the Street strong management is now in place.)
Groupon's stock is now up 126% YTD and almost 400% since it's low last fall. The company's market capitalization now stands at over $7 billion putting all those "you should have taken the $6 billion from Google" stories to bed for a while.
I expect Groupon to continue to show strong results in the second half of the year. It also seems to me that might be setting up to jettison their EMEA business into which they expanded to quickly.
Groupon is the big battleship in the huge local ecommerce ocean. And a rising tide lifts all boats. What is good for Groupon is good for nCrowd.