UPDATE: Benchmark Downgrades Groupon to Hold on Poor Customer Trends

Benchmark reduced its rating on Groupon

from Buy to Hold and reduced its price target from $20 to $7. Benchmark noted, "2Q12 subscriber growth slowed meaningfully. Gross billing per subscriber dropped materially. This drove gross billings down sequentially. This was discouraging enough but 3Q operating income guidance implies a sequential contraction in EBITDA margin. It appears the daily deal business has run into a wall, with some blame going to the European recession. We believe the weak trends are likely to persist. We reduce estimates and our target multiple. Our price target drops from $20 to $7 per share, based on 14x 2012E EBITDA." Groupon closed at $7.55 on Monday.