“The rate of cash burn and operating losses indicate that we will not be able to meet our obligations over the next 12 months,” the company said. “The recent events and the conditions in the market, in aggregate, raise substantial doubts about our ability to continue”
The Groupon company, issued about 12 years ago at a market value of 13 billion dollars, encountered difficulties roughly from the first day it started trading. Now she warns that she may not survive.
The company submitted a 10Q form to the Securities Authority which includes the warning “going concern”. Groupon ended the quarter with $163.8 million in cash, while the company’s market value stands at $98 million, down 99% since the company’s 2011 IPO. In the last quarter, it burned 76.3 million dollars in operating expenses. “The rate of cash burn and operating losses indicate that we will not be able to meet our obligations over the next 12 months,” the company said. “The recent events and the conditions in the market in aggregate, raise substantial doubts about our ability to continue.”
Last March, the company reached an agreement with the investment company Pale Fire Capital, in which it agreed, among other things, to appoint Duzan Senkifel as the interim CEO and another partner from the investment house as the CFO. Despite this, as of now, the new team has not been able to make the long-awaited change. In its latest reports, the company reported revenues of $121.6 million, a 21% decrease from last year. Groupon also reported a loss of $28.6 million, when on an Ebitda basis it lost $4.9 million. The number of active customers in North America decreased by 3% compared to the previous quarter and by 22% from last year. International revenues decreased by 25% and the number of international customers decreased by 11% compared to the previous year.
In a letter to the shareholders, the CEO wrote that the “field of local services and experiences” is a limited field, with a potential market of more than 1 trillion dollars. In addition, he admitted that the results of the quarter “indicate that the business is facing serious challenges that we must face and the urgent need for change Significant.” He also added that Groupon is examining options to improve its liquidity situation, which may include additional fundraising through the issuance of debt or shares, or the sale of assets.
Among the things Sancipal is planning: improving the deals, the company offers to its customers, upgrading the customer experience, and reducing the cost structure. Barclays analyst Trevor Young gave the company’s stock an “underperform” recommendation and said the CEO’s change plan looks identical to the plan of the previous management. “Our fear is that a similar strategy will yield similar results,” he wrote. Groupon shares have fallen 62% since the beginning of the year and 76 % in the entire last year.
Groupon Short (Sell)
Enter At: 3.01
T.P_1: 2.33
T.P_2: 1.28
T.P_3: 0
S.L: 4.22
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