NEW YORK Groupon's (GRPN) stock is sinking after the online deals company delivered a less-than stellar revenue guidance for the current quarter, renewing worries about the sustainability of its business model.
Several analysts, including Aaron Kessler of Raymond James, downgraded Groupon's stock. Kessler says revenue was lower than expected because fewer people are buying deals, Groupon's core business. He cut his rating to "Underperform" from "Market Perform."
Groupon says it is focused on growth at the cost of some profitability by offering better deals to top merchants, which in turn is increasing consumer demand. But Kessler says he expects revenue and earnings growth to be limited and shares to feel pressure until late this year at the earliest.
Chicago-based Groupon's stock is down $1.14, or 19.1 percent, at $4.84 in afternoon trading.