If you’ve never heard of LivingSocial, there’s a good reason why. A daily coupon and deal website, the company has been behind its largest competitor Groupon since the site launched back in 2007. Having received millions of dollars in funding spent on numerous acquisitions that still have only gained them minimal notoriety, the prospects for this company do not look good. LivingSocial saw its valuation fall by 94% in a deal with its venture investors last year from its worth of $5.7 billion 2011.
The issue in general with daily deal websites is in the way they function. Merchants essentially “sell” their coupons online to people through the company in order to attract customers. The daily deal supplier, in this case LivingSocial, then pays the merchant for the sales and for driving traffic to their website. However, profits in last years first quarter were down $50 million, compared to the $156 million profit it made in the same period the year before. On top of that, LivingSocial’s liabilities outweigh its assets by more than 4 to 1. Though daily deal websites in general have a struggle to face, LivingSocial especially is looking very grim and many experts don’t expect it to make it through springtime.