New York: Groupon said Thursday it was replacing chief executive Andrew Mason, who said he was “fired,” following the struggling daily deals firm’s share price plunge of 24 percent after bad quarterly results.
The company said executive chairman Eric Lefkofsky and vice chairman Ted Leonsis would take over the post of chief executive, effective immediately and that Groupon “will continue to invest in growth.”
The board thanked Mason, a founder of Groupon, and said it has begun a search for a new chief executive.
“Andrew helped invent the daily deals space, leading Groupon to become one of the fastest growing companies in history,” said Lefkofsky.
Leonsis said: “Groupon will continue to invest in growth, and we are confident that with our deep management team and market-leading position, the company is well positioned for the future.”
Mason, in a letter to employees, said he was “fired” but remained upbeat about the company.
“I love Groupon, and I’m terribly proud of what we’ve created,” Mason said.
“I’m OK with having failed at this part of the journey. If Groupon was Battletoads, it would be like I made it all the way to the Terra Tubes without dying on my first ever play through.”
Sentiment has been souring on Groupon, which made a splash with its 2011 stock market debut but has been dogged by fears of “deal fatigue,” and worries about its profitability as well as accounting questions.
“We believe uncertainties with Groupon remain due to staff turnover, competition, and increased investments,” said a note earlier Thursday from Edward Woo at Ascendiant Capital Markets.
“In our view, the slowing growth and weak margins are likely to bolster continued skepticism as to Groupon’s valuation, growth prospects, and profit potential.”
Groupon’s shares slumped to $4.53 at Thursday’s close, a 77 percent drop from its public offering price of $20 in November 2011.
Scott Devitt at Morgan Stanley said Groupon’s mission appears muddled now that it has moved into new services such as direct sales to consumers, and not just coupons for discounts with merchants.
“We continue to believe Groupon is a local ecommerce leader. However, we remain on the sidelines as the company experiments with myriad operating levers and strategies,” the analyst said.
“We would become more constructive on the stock if we could better understand Groupon’s ability to integrate the product companies it has acquired with the internally developed projects.
The Chicago-based firm reported a loss of $81 million in the fourth quarter, and a $67 million dollar deficit for the full year.
The loss translated to 12 cents per share in the quarter, compared with expectations of a profit of three cents a share.
With the daily deals sector fading fast, Groupon also offered a weak revenue outlook of $560 million to $610 million, well below market expectations of $650 million.
Groupon shares were listed on the Nasdaq in 2011 in a blockbuster public offering that raised a whopping $700 million and triggered fears that investors were overvaluing hot Internet startups.
The troubles at Groupon come amid ongoing woes at number two sector member LivingSocial, also losing money.