LiveDeal Inc. (
recently announced that traffic in its restaurant daily deal
website livedeal.com surged 153.0% from Dec 2013 to Jan 2014. On
Feb 7, 2014, shares jumped 19.8% ($2.85) and eventually closed at
LiveDeal offers specialized online marketing solutions to local
businesses. Already available in San Diego and Los Angeles,
livedeal.com recently entered San Francisco. Launched in Sep
2013, it helps restaurants to offer daily deals and target
prospective customers using the platform's geo-location feature
on a real-time basis.
Moreover, unlike its nearest competitor
, livedeal.com does not charge any fees from the restaurants.
Although this is not a significant competitive advantage for
LiveDeal, the platform's growing traffic base is a concern for
Groupon in the long run.
Nevertheless, Groupon's policy of launching new products on a
regular basis and the growing popularity of its mobile app
continues to attract consumers. The company noted that more than
50% transactions (55.0% of North America) in the holiday season
were carried out through mobile devices. Billings were up 30.0%
from the year-ago period, during the four-day holiday weekend in
Groupon is set to announce fourth-quarter results on Feb 20,
2014. The company forecasts revenues in the range of $690.0 to
$740.0 million. The company expects the bottom line to range from
breakeven to earnings of 2 cents per share. The strong holiday
season sales will boost Groupon's fourth-quarter results.
We believe that Groupon is well positioned to gain from the
rising e-Commerce spending on mobile devices, a profitable
domestic market and an expanding international market.
Although mobile presents ample growth opportunity, increasing
competition from established players such as
as well as small companies like LiveDeal remains a major concern.
We also note that the barriers to entry into the daily deals
market are quite low, which will attract new entrants, going
forward. Hence, to remain competitive, Groupon will be forced to
continue investments to expand its merchant base, which will hurt
profitability, going forward.
Currently, Groupon carries a Zacks Rank #3 (Hold).
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