Groupon Posts Mixed Earnings
On Tuesday, Groupon (GRPN) released its first quarter earnings report. The Chicago based company reported earnings per share of $0.03, beating estimates of $0.02 EPS. Also, Groupon reported revenue of $750.4 million missing analysts’ estimates by $61.79 million or total revenue of $798.3 million. This is up 10 percent year-over-year. According to the CEO of Groupon, Eric Lefkofsky, the first quarter was positive for Groupon despite various challenges such as a strong U.S. dollar (USD). At the close of trading on Monday, the shares of the e-commerce company advanced 3.6 percent to trade at $7.04 a share. After the earnings report release on Tuesday, Groupon shares declined 1.61 percent in after-hours trading. Interestingly, over the past 18 months, Groupon has been working hard to shift their company from a simple daily deals site to a more comprehensive e-commerce platform. In order to achieve this transition, the company has also gotten rid of any non-core properties such as Ticket Monster. In this way, Groupon has been able to accumulate cash. As reported in their first-quarter earnings, the company currently has $975.5 million in cash and cash equivalents.
In U.S. trading on Tuesday, U.S. stocks declined. Added to this, the S&P 500 index (SPX) suffered its biggest 1-day percentage decline in six weeks. As a result, all the gains the benchmark index has achieved over the last 2 sessions were erased. Negative investor sentiment was prompted by a trade-deficit report that indicated the trade gap in the country had reached its highest level in 7 years as the West Coast port dispute ended. Interestingly, when a trade deficit widens, it could indicate that the gross domestic product (GDP) reading in the U.S. will shift from 0.2 percent to negative territory when figures are revised later this month. The CBOE Volatility index, better known as Wall Street’s fear gauge, rose 11 percent. Added to the poor performance among stocks, the shares of Apple Inc. (AAPL, -2.25%) dropped 2.23%, and as the heaviest weighted stock in the index, the Nasdaq Composite index (COMP) dropped 1.6%, or 77.60 points to 4,939.33. Also on the downside was the SPX which declined 1.2%, or 25.03 points, at 2,089.46. Meanwhile, the Dow Jones Industrial Average (DJIA) also dropped 0.8%, or 142.20 points, to 17,928.20 while the Russell 2000 index (RUT, -1.44%) of small companies dropped 1.4%, or 17.80 points, to 1,215.42.
On Tuesday, in currency trading, the U.S. dollar (USD) traded lower. This came in response to the release of mixed economic reports out of the U.S. which did little to boost investor sentiment regarding the strength of the economy. According to the Institute of Supply Management, their non-manufacturing PMI (purchasing manager's index) rose to 57.8 in April, marking a 5-month high. This beat expectations for a reading of 56.2 while April’s reading was also up from 56.5 in March. In a separate report, the Bureau of Economic Analysis in the U.S. reported that the trade deficit in the country widened from a deficit of $35.89 billion in February to $51.37 billion in March. Analysts were expecting the deficit in March only to widen to $41.2 billion. The EUR/USD traded at 1.1194, up 0.45%. This increase came after the European Commission stated in its quarterly forecasts that it expects the economy in the euro zone to increase to 1.5 percent in 2015 compared to 1.3% in the last quarter. Also, the GBP/USD traded at 1.5196, up 0.50% while the USD/JPY held steady at 120.12. The U.S. dollar index was at 95.20, down 0.40%.
On Wednesday, in early morning Asian trading, crude oil prices increased. This came after the industry data on stocks in the U.S. showed a decline. In their weekly report, the API (American Petroleum Institute) said that last week, crude oil stocks in the country declined 1.5 million barrels. Investors will now turn their attention to the weekly inventory report from the Energy Information Administration (EIA) which is expected out on Wednesday. In commodity trading, WTI crude oil for delivery in June traded at $60.77 a barrel, up 0.33 percent on the NYMEX. Also, on Tuesday, Brent crude oil for June delivery traded at $67.52, up 1.61% or 1.07, on the Intercontinental Exchange (ICE).