Aron Pinson was recently a weekly guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick.
LPS Financial Chief Investment Officer and MicroFundy blog author Aron Pinson discussed Groupon Inc GRPN on the show.
Pinson noted that over time, it became clear that Groupon’s model of taking a cut from third-party sales, along with its 80 percent margins, could not scale.
The company had to pivot its business model resulting in much lower margins, according to Pinson, which included providing low-margin fulfillment services for goods.
Beyond its high-margin but limited segment of working with third parties, the company was “dead in the water” and any future revenue growth would “not come with any margin expansion,” Pinson said.
After plummeting shortly after the opening bell, Groupon recently traded at $7.28, up 0.34 percent.
Listen to the show here:
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