Groupon Plunges on Q4 Earnings Restatement

Shares of daily deals company Groupon GRPN plunged on Monday after the company was forced to restate its Q4 earnings results due to customer refunds on new, higher priced offerings from the company. The revisions reduced revenue for the fourth quarter by $14.3 million and cut into net income by $22.6 million or $0.04 per share. The stock has shed 11.43% to $16.28 on Monday in the wake of the restatement and a couple of downgrades. Groupon shares are now trading substantially below their IPO price of $20, and the Street is starting to question the viability of the company's model. Jordan Rohan, an analysts at Stifel Nicolaus, cut his rating on GRPN from "neutral" to "sell" and wrote that “This is bigger than an accounting and trust issue — in our view, the higher level of consumer returns implies that the Groupon platform may have some trouble extending to higher ticket items." He added that “the rationale for the accounting restatement opens up the possibility that Groupon's addressable market will be more limited than we thought before.” Groupon was also downgraded from "buy" to "neutral" at Bank of America Merrill Lynch.