Groupon’s Stock Dips on Concerns About Merchant Satisfaction
Groupon’s stock price is trading lower today after a survey found that more than half of merchants contacted were not planning on running a new deal over the next six months.
The stock fell $1.36, or roughly 6.6 percent, to $19.27 a share.
In November, the company’s stock priced at $20 a share and has been fairly consistent since, except for one major hiccup late last month when shares dropped as low as $15.
But it’s almost as if investors were looking for a reason to dump the stock — the survey released today by Susquehanna Financial Group and daily deal industry tracking firm Yipit was largely positive. It found that 80 percent of merchants said they enjoyed working with daily deals sites, such as Groupon, LivingSocial and others.
Some of the more negative points included concerns about the high level of discounts associated with featuring a daily deal and low repeat rates from consumers who purchased vouchers.
The response the market may have found the most alarming was how often merchants were comfortable running deals. The survey found that 52 percent of the merchants had no plans to feature deals in the next six months, and only 24 percent intend to offer one in the same time period.
But realistically, most small-to-medium-size merchants could not offer deals more often than once a year, given that it typically takes that long for vouchers to expire. Most customers redeem the coupons over several months.
The survey polled nearly 400 merchants that had run daily deals in the past with companies such as Groupon and LivingSocial, but only 100 responded to the questions.