Concern among investors that the once-booming daily deals business has cooled are playing out in the market, with the stock price for industry leader Groupon continuing to slide last week.
Though District-based LivingSocial has faced less scrutiny as a private company, analysts say that Groupon’s woes have a direct impact on perceptions of the company’s value when it inevitably goes public or looks to raise more capital.
“In order to change that view, LivingSocial would have to show significant profitability and a differentiated consumer offering,” said Jordan Rohan, a managing director at Stifel Nicolaus. “That’s what LivingSocial is trying to do.”
LivingSocial has sought to separate itself from Groupon, in part, by hosting one-time events, such as beer festivals and sushi-making classes, and constructing a multipurpose activity venue at 918 F St. NW.
But at a media day in June, the company said the vast majority of its revenue still flows from the daily deals business, with its discounted travel getaways contributing the second largest amount. Groupon offers similar services.