In its first earnings announcement since going public last year, Groupon beat on revenue but missed on earnings as user growth slowed from the breakneck pace of past quarters.
"The number of active customers came in short. That means not enough people are buying Groupons,” said Sameet Sinha, an analyst at B.Riley. "Yes, you can get fewer people to buy more, but how long can that continue? You need to start investing in new customer growth."
The news sent shares of the online coupon company down more than 11 percent in after-hours trading on Wednesday. Get after-hour quotes for Groupon here.
On an adjusted basis, the company posted a fourth-quarter loss of 2 cents a share.
The company also reported fourth-quarter revenue of $506.5 million, up 194 percent from the final quarter of 2010.
Analyst had expected the company to deliver a profit of 3 cents a share on revenue of $475 million, according to Thomson Reuters.
Groupon's CEO and founder Andrew Mason told reporters Wednesday that the company plans more personalization features for customers in the coming months. Overall, the company attributed its quarterly net loss to paying higher taxes overseas.
Groupon said it expects revenue to come in between $510 million and $550 million for the first quarter of 2012, a slight increase from 2011's fourth quarter.
There was "some concern that the guidance looks flattish, sequentially," said Raymond James' Aaron Kessler. "Maybe investors are looking for a little bit more growth on a sequential basis."