Groupon Shares Plunge After Loss

Shares of deal site Groupon plunged this morning after the firm reported another quarterly loss when analysts had expected a profit.

Groupon, which first sold shares to the public  Nov. 4 at $20 each, said after the markets closed Wednesday that the fourth-quarter loss was 2 cents a share, compared with a loss of 53 cents a year earlier. Sales though soared to $506.5 million from $172.2 million.

The firm spent $156.5  million to attract users of its coupons, which offer discounts on goods and services through local retailers. Costs to set up a new international headquarters in Switzerland led to an extra $34.8 million in taxes, wiping out any chance of a profit for the quarter.

Analysts have warned that Groupon's business model is rapidly being replicated by fierce competitors like fellow deals website LivingSocial and even Facebook, which has launched a deals feature.

Some merchants have said they have lost money through deal sites like Groupon while others have used them as marketing tools to attract new customers.  Merchants have complained that the  new customers from Groupon can disrupt their business and aren't very loyal.

Groupon says it has over 33 million active users as of the fourth quarter.  The company launched in November 2008 and has never made a profit.

Its shares fell 10 percent to $22 in trading at the market open.

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