Groupons Earnings Preview – Q4 Results Will Post Tomorrow

Daily dealers waiting for the G numbers tomorrow

Market analysts, investors and the daily deal industry as a whole will get the chance to throw in their two cents worth tomorrow after the market (Dow Jones) close. The debate is whether or not Groupon (GRPN) will look like a bargain when the company posts its fourth-quarter results on Wednesday or should every investor run for the hills and duck and cover. This will be the company’s first earnings report as a publicly traded company.

What to look for

• Any insight into Groupon’s finances and its prospects for growth.
• Any outlook or indication of its expectations for the rest of the year will be important.
• Any details regarding subscriber figures as well as how many of these subscribers are buying deals on a regular basis.

Why it’s important

Groupon Incorporated has set the standard as the largest and only publicly traded pure daily dealer. As a pioneer, its earnings, growth rate, subscriber base and associated data will be dissected and analyzed as an important gauge of how this new industry is faring. Companies such as Google, Amazon and Travelzoo have a vested interest since a substantial portion of their expenditures and potential profits are tied into the daily deal industry.

What is expected

According to a recent poll by FactSet.com (Financial analyzers for the institutional investment arena) analysts, on average, are expecting earnings adjusted to exclude the impact of one-time items and stock-based compensation of 3 cents per share on revenue of $473.1 million.

I am hearing that analysts at Morgan Stanley are expecting positive news: revenues above estimates, constrained marketing spending, and better than estimated EBITDA. However, the same group feels the shares are fairly valued in the $23 range.

The dark side, which includes some hedge fund managers, feels completely opposite. Venture Capitalist Chris Dixon recently tweeted that a hedge fund manager he knows looked into shorting Groupon stock ahead of tomorrow’s earnings, but backed off when he found out the interest rate on borrowing Groupon stock was a whopping 40%.That is super high. It’s an indication that a lot of money has already been bet on Groupon’s stock ticking downward in the days ahead. My derivative analyzer shows exactly the same data, there are a ton of bets placed that the G team will go down.

That being said, Groupon may surprise to the upside in which case the force would not be with the dark side.

 Source: ABC News