LivingSocial Posts Another Loss, Valuation Plunges
By Greg Bensinger
Wall Street Journal
3:29 pm, Oct 25, 2013
LivingSocial reported a $26 million loss in the third quarter, according to an Amazon securities filing, as the daily-deals outfit continues to struggle to recapture its early success.
Amazon now values the Washington, D.C., company at just $48.4 million, based on the assessment of its 31% stake. That’s an extraordinary decline from June 2012 when Amazon valued LivingSocial at nearly $1 billion.
LivingSocial’s sales fell to $120 million from $139 million a year earlier, the filings show. LivingSocial’s $451 million loss in last year’s third quarter included a $500 million writedown related to the declining value of some subsidiaries.
LivingSocial has sought to revamp its business, including now offering longer-term deals, rather than the daily emailed offers from restaurants and spas, mirroring a strategy from rival Groupon GRPN +1.61%. It has also experimented with organizing its own events, such as concerts and cooking classes.
Before Groupon’s wobbly IPO and the cratering of the daily deals business, LivingSocial was considered a top contender to go public.
Groupon, by contrast, is expected to post an $8.7 million profit on $616.1 million in sales in the third quarter, according to estimates compiled by Thomson Reuters. Its market capitalization is at about $6.6 billion.
A LivingSocial representative noted that operating earnings before interest, taxes, depreciation and amortization was a loss of $3.6 million in the quarter.
An Amazon representative didn’t immediately respond to a request for comment.
(CORRECTION: A previous version of this story said LivingSocial’s operating earnings before interest, taxes, depreciation and amortization was a gain of $3.6 million in the third quarter. It was a loss of $3.6 million.
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