Groupon's shares fell 14.2 percent to $17.22 on Nasdaq, bringing its decline over the last three days to about 34 percent.
Groupon raised more than $700 million in an IPO in early November, making it the biggest IPO by a U.S. Internet company since Google Inc raised $1.7 billion in 2004.
Analysts have cited concerns about increased competition, a greater availability of the company's stock for short-selling, and a sharp reversal of market sentiment that is taking down more speculative companies.
"The momentum is negative now and it is likely to continue negative until they have something positive about the company," said Edward Woo, a Groupon analyst at Wedbush Morgan.
"There was a lot of negative sentiment heading into the IPO, the IPO surprised a lot of people, it was much stronger than expected," he said.
One reason for that strength was the fact that Groupon sold only about 6 percent of itself in the IPO, creating a scramble for the stock. It was one of the lowest floats of the past decade.
LivingSocial, Groupon's closest rival, which is part owned by Amazon.com Inc , announced plans on Monday to offer more than 20 deals with national merchants over the crucial Black Friday shopping period.
Daily deal companies often subsidize national deals, making them less profitable than offers run with local merchants. The national deals usually bring in lots of new customers, but put pressure on profit margins.
Analyst say Groupon shares were also lower because it became easier this week to short, or bet against, the company.
In the first week after the IPO, there was little stock available for short sellers, who have to borrow shares before they can sell them. If the stock drops, they can buy it back at a lower price, return the shares to the lender and pocket the difference as profit.
Woo has a price target of $22 and a "neutral" rating on Groupon's stock. He says that may come down if the stock is not able to bounce back soon.
"It is a little surprising at how quickly it's happening," said Woo. "But on the other hand the valuation was very high to begin with."
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