Groupon shares lost some 30 percent of their value Wednesday, after reporting third-quarter results that came with a cavalcade of bad news, including a revenue miss, disappointing guidance and a flat customer base.
Oh, and the company continues to lose money — logging a loss of $27.6 million in the quarter, as its marketing expenses plus selling, general and administrative costs eclipse its gross profit.
Investors shouldn't expect that to reverse anytime soon, as the company plans to double its marketing spending investment in an apparent effort to turn the numbers around.
This as Rich Williams, who was promoted to the company's COO position just five months ago, is named CEO.
"Obviously this is not your fairy tale first day on the job," Williams understated in a Wednesday morning interview on CNBC.
But the biggest concern among analysts is that marketing is not the answer.
Post-earnings, Piper Jaffray analyst Gene Munster downgraded the stock from "overweight" to "neutral," writing: "At the core of our downgrade is a belief that Groupon should be more focused at improving the product and less focused on marketing. We understand the company's investment in marketing approach but do not believe it solves the company's most compelling challenge, which is building a more compelling product that virally attracts users."
And with that, the analyst chopped off two-thirds of his price target.
Similarly, Sterne Agee CRT analyst Arvind Bhatia cut his rating to "neutral" given his expectation that the strategy shift "will take time to play out."