Groupon’s Explosive Growth Continues … As Do Its Losses

Daily deal leader Groupon continues to grow its revenues at a jaw-dropping pace. According to its updated S-1 filing, the company sold $878 million in Groupons in the second quarter, ten times more than a year earlier:

However, costs have been exploding too. Groupon spent almost $1 billion in Q2:

Put it all together, and Groupon has been losing hundreds of millions of dollars:

Small compared to the billions and trillions of red ink the federal government confronts, but still a formidable problem. Particularly given all the other players in this space, including a certain search company whose $6 billion acquisition offer Groupon spurned last year. I would have taken the money and run. But perhaps I am not seeing the secret ingredient that will give Groupon a persistent competitive advantage in the face of vigorous competition.

About Donald Marron 294 Articles

Donald Marron is an economist in the Washington, DC area. He currently speaks, writes, and consults about economic, budget, and financial issues.

From 2002 to early 2009, he served in various senior positions in the White House and Congress including: * Member of the President’s Council of Economic Advisers (CEA) * Acting Director of the Congressional Budget Office (CBO) * Executive Director of Congress’s Joint Economic Committee (JEC)

Before his government service, Donald had a varied career as a professor, consultant, and entrepreneur. In the mid-1990s, he taught economics and finance at the University of Chicago Graduate School of Business. He then spent about a year-and-a-half managing large antitrust cases (e.g., Pepsi vs. Coke) at Charles River Associates in Washington, DC. After that, he took the plunge into the world of new ventures, serving as Chief Financial Officer of a health care software start-up in Austin, TX. After that fascinating experience, he started his career in public service.

Donald received his Ph.D. in Economics from the Massachusetts Institute of Technology and his B.A. in Mathematics a couple miles down the road at Harvard.

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