NEW YORK (AP) — Online deals site Groupon Inc. has a lot to prove when it reports third-quarter earnings Thursday after the stock market closes. Its stock treading water slightly above its all-time low, the online deals company faces concerns about its ability to grow and questions over whether its business model is sustainable or merely a fad.
WHAT TO WATCH FOR: Analysts such as Jeff Houston of Barrington Research have expressed concerns about Groupon's outlook for the current quarter, due to Superstorm Sandy, which wreaked havoc on many small businesses in the northeastern U.S., and the ongoing economic weakness in Europe.
An important metric to watch will be the number of active customers Groupon had as of the end of the quarter. This is defined as someone who's purchased a deal in the previous year.
Besides revenue, investors also pay attention to Groupon's gross billings, which measures how much money it collects from customers before paying merchants.
Houston also expects the Chicago-based company to give an update on Groupon Payments, a service it launched in September that allows businesses to accept credit cards using an iPhone or iPod Touch. It competes with existing mobile payments systems such as Square Inc.
WHY IT MATTERS: Groupon is the largest and only publicly traded daily-deals site out there. Founded in 2008, it pioneered the market, which offers subscribers large discounts on everything from spa sessions to restaurant meals if enough people buy in. It has sparked many copycats, including LivingSocial, which is part-owned by Amazon.com Inc.
Due to the company's pioneer status, Groupon's earnings are an important gauge of how this new industry is faring. But the company has lost investor support in its first year as a public company. Its stock has lost 80 percent its value since it went public at $20 per share last November amid worries about its business model.
WHAT'S EXPECTED: Analysts, on average, expect earnings of 4 cents per share on revenue of $592.1 million, according to a poll by FactSet.
In August, Groupon forecast revenue of $580 million to $620 million.