The company is now facing various challenges, including decelerated customer growth, and excessive build-up of low-margin inventory, compelling the company to diversify its operations. “We consider the company’s decision to restructure its worldwide operations, eliminate roughly 1,100 positions, and shutter operations in seven geographies as a wise decision by its management to exit countries where it likely could not generate an appropriate return on investment”. Groupon also plans to close its operations in Morocco, Philippines, Thailand, Panama, Puerto Rico, Uruguay and Taiwan, as a part of its cost-cutting efforts. “We believe that in order for our geographic footprint to be an even bigger advantage, we need to focus our energy and dollars on fewer countries”. Apart from this, the investors might think that by selling its services to the local business, Groupon is going the labor-intensive route. This laying down started recently in Turkey and Greece and a sell-off of a controlling stake in Groupon India to Sequoia. Instead of focusing on daily deals, it now has an objective to establish a more diverse business by concentrating on local commerce. The company reportedly lost $820 million between 2009 and 2013. Most of these charges would consist of employee compensation and severance pay, which would be given out to workers in cash. “So we chose to leave a number of countries where the required investments do not match the potential of the market”, says Rich Williams.
Advertisement
Next noteworthy mover is New York Mortgage Trust Inc (NASDAQ:NYMT) with a loss of -2.10%, moving its past 5-day performance to 0.62%.
The Washington Post reports a decline of 2.5 percent in the company’s stock in morning trading Tuesday to about $4 (AU$5.68) a share.
But then some businesses, especially restaurants, begancomplaining that offering deals through Grouponended up costing them money. The stock has traded in the range of $3.53 and $8.43 in the past 52 weeks. Through Monday, the stock had slumped 50% this year.
Advertisement
Brean Capital remains bullish on Groupon and maintains its $8 price target. Customers purchase Groupons from the Company and redeem them with its merchants.
