Groupon Stock Falls Below Introductory IPO Price
Groupon stock plunged more than 15 percent on Wednesday, closing at an all-time low of $16.97, well below the original $20 price the shares sold at when the company went public earlier this month. It was the third straight day of hefty declines for the stock, as shares fell about 10 percent on Monday and almost 15 percent on Tuesday. The declines are a sign that the excitement has worn off for Groupon stock, and investors are growing increasingly concerned about the company’s competition and overall business fundamentals.
Groupon has been losing money since it began offering daily deals in Chicago at the end of 2008. While the company has been steadily expanding into more and more markets, its revenue has flatlined over the last few quarters. The company has lost a number of top executives, and business owners have begun complaining that doing business with Groupon is generally not worth the hassle. In addition, the daily deals market is expanding at a rapid pace because its so inexpensive to get started in, meaning Groupon has to maintain an expensive marketing campaign to continue attracting customers in a growing field of competitors.
Then there’s Groupon’s accounting. Since the company first announced its plans to go public, analysts have widely questioned its accounting methods, prompting the company to re-file the IPO. The revisions effectively cut Groupon’s revenue in half, and forced the company to lower its target price for shares. Despite all these problems, Groupon shares soared more than 50 percent on the first day of trading, as investors who had been waiting for months to get their hands on Groupon stock relished the opportunity. But the excitement has seemingly wore off and investors are getting out because the company is bleeding money and its growth is slowing considerably.