After tumbling well below its IPO price, Groupon’s (NASDAQ:GRPN) strong results for October helped its shares rebound in the last half of the week. [1] According to daily deal aggregator Yipit, [2] Groupon’s North American gross billings for October rose by as much as 22% from September, which supports the strong growth outlook. Groupon leads the daily deals space with competitors such as Google (NASDAQ:GOOG) Offers and LivingSocial.
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Groupon Getaways Leads Growth
According to the Yipit data report, Groupon’s total gross billings for North America rose from $144 million in September to around $176 million in December. A big factor for this growth was Groupon’s travel deal service Groupon Getaways, which saw a whopping 150% growth in gross billings since September.
The silver lining for Groupon here is that its ace competitors LivingSocial’s gross revenue actually declined by 8% for the same period. While this means that Groupon got the deal-mix right for October, it may also indicate a rise in marketing costs, the biggest cash-drainer for the company. The company’s Q4 results should throw more light on whether Groupon’s strong October growth was a result of clever deals for merchants/consumers, or another expansion effort through higher marketing expenses.
We recently launched coverage on our analysis of Groupon with a $13 price estimate. Refer to our note on why Groupon’s valuation has fluctuated significantly over the past 2 years.
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