GRPN: Groupon Stock Closes At Lowest Level Since IPO

NEW YORK -- Groupon's stock has closed at its lowest level ever amid growing scrutiny over its business just five months after it went public.

Shares of Groupon Inc. closed at $15.02 on Tuesday. That's the lowest since the company went public in November, when its initial public offering of stock priced at $20 a share.

The Chicago-based company is facing a shareholder lawsuit and a possible review by federal regulators. It revised its fourth-quarter earnings on Friday, lowering its reported revenue by 3 percent and widening its losses. Groupon said it hadn't set enough money aside for refunds.

The Wall Street Journal reported earlier that the Securities and Exchange Commission is examining Groupon's revision. That's a common practice for any company that issues a restatement, but it may have raised a red flag for Groupon investors who were already looking at the company closely because of previous blunders.

"In general, any company that issues a restatement is likely to get a close look," said Brian Lane, a former director of the SEC's corporation finance division, who is an attorney at Gibson, Dunn & Crutcher in Washington. Lane didn't comment on Groupon's situation.

That Groupon revised its results and disclosed weakness in its internal financial controls are "two things that are not good," said Walter Van Dorn, a former special counsel in the SEC's corporation finance division who now heads law firm SNR Denton's corporate practice in New York.

The company has had "lots of bumps in the road," said Van Dorn. "It wouldn't surprise me if they're under a magnifying glass at the SEC."

Groupon had no comment on the reported SEC review or on the shareholder lawsuit.

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Comments

[MJHammonds]

10:03 PM on 04/04/2012

I was hit up not too long ago by a recruiter for Living Social (another Groupon offering).  I'm always looking for new opportunities, but as someone who has been in sales and marketing for over 20 years, I couldn't see how this business model could sustain itself.

Plus, it didn't take most merchants to catch on that signing up for that kind of deal, which requires a 50 percent discount on their products or services, was then halved after Living Social took their cut.  

So in essence, the business was being reimbursed 60 days later for 25% of whatever was sold.  The only real appeal I saw in my market was that there was no money asked for up front by LS/Groupon.

That appeal gets very slim when you end up giving away your product/service below cost, to people who rarely become regular customers.

[sensimilla]

08:06 PM on 04/04/2012

Groupon stock will be in the dumpster in 1 yr, they will be bankrupt within 2.

[instarx]

07:35 PM on 04/04/2012

I've abandoned Groupon. It started well with some nice coupons sent to me, but within a few week the coupons got weird ((30% off teeth cleaning for children, 50% off wax jobs for my legs [and I'm a guy]). Then they started sending me coupons for stores 30-40 miles away as if they were in my neighborhood. Then I started getting mattress coupons for huge savings, but when you would check with the store's website it was their everyday "sale" price.

I just gave up and told my browser to treat all emails from Groupon as SPAM. I don't miss them a bit.

[shutter]

05:51 PM on 04/04/2012

They should've taken googles purchase offer.

[parabq]

01:49 PM on 04/04/2012

Oh now thats surprising. hahahahahaha suckers!

[Amalek]

11:27 AM on 04/04/2012

Stupid business model.  I thought we all learned from Web 1.0 not buy companies with stupid business models.

[mateoconifer]

10:56 AM on 04/04/2012

It was overpriced when it opened, it was garbage as an idea. a typical internet offering nothing of substance, all smoke, mirrors and gaul.

[J0E1]

10:14 AM on 04/04/2012

Anyone who didn't see this coming is a complete idiot.  Can't put it in nicer words.  By Groupon's IPO, there were already a dozen other companies offering the exact same service.  Right now, there are more companies offering these 50% off discounts than I can count.  There seems to be a new one every day.  Groupon simply doesn't have a unique enough business model that can prosper.  Any Joe and his mom can start up a Groupon like business locally for local businesses that can target local people and businesses better than Groupon and that's the point isn't it?  No one really cares about "deals" for any business that isn't within driving distance...

[abbraxus]

08:53 AM on 04/04/2012

I wonder if the upcoming Facebook IPO will follow the same route to failure.

[mateoconifer]

10:57 AM on 04/04/2012

OWW should occupy FB long enough to unoccupy FB so that the bankers that get all of the money on this thing get hosed.

[staggerme]

07:38 AM on 04/04/2012

Groupon is a flash in the pan. As a small retailer I would never sign up with them.

[sensimilla]

08:07 PM on 04/04/2012

Smart of you. Groupon is destructive to small retailers..

[kurios]

07:17 AM on 04/04/2012

this was just a money grab from the beginning...

1-find a small company with a marketable trademark but an utlimtely bad plan (Groupon was a money loser form day one)
2-pump it up with some cash to increase its exposure prior to the IPO
3-overvalue the IPO by 50 or 60 dollars a share
4-pump up the demand for the IPO by creating the illusion that its the next huge thing
5-release IPO selling 100k of the overvalued stock
6-making a pile of cash from people buying your bullshit
7-stock price will eventually decline to actual stock value
8-the people that bought in lose their money
epilogue 1
9-people sue for fraud
10-case dismissed by wall street purchased judge
epilogue 2
9 SEC invesitgated
10 DoJ/SEC refuses to move due to Wall Street insider at the helm

[French Toast]

06:03 AM on 04/04/2012

lol wut

[jp837]

05:51 AM on 04/04/2012

The Groupon IPO made a ton of money for the CEO and other insiders and initial investors. Even if the stock continues to tank, those people already made fortunes of money for their personal bank accounts and are doing very well. They are set financially for the rest of their lives.
God Bless the American Dream.

[malexandria]

06:20 AM on 04/04/2012

Same thing is going to happen with Facebook all the insider presale trading going on. All their friends are going to make hundreds of millions on minimal investments and when it goes public it's going to be "artificially" crazy high for the first six months. I hate these scams.

What happened to the days when everyone had an equal chance at stocks at reasonable initial offerings? How is what facebook, google, and groupon did before their initial public offerings, NOT illegal?

[jp837]

08:22 AM on 04/06/2012

Facebook is similar to Google at it's IPO debut, but even better. Facebook has over 800 million users who spend significant time on its' website and share their personal info. Facebook has revenue of over a Billion Dollars/Year. Facebook is the dominant leader in their industry and they are very profitable. I think after the IPO, Zuckerberg and his team will continue to innovate and make Facebook bigger and better and with even more revenue streams. They haven't even really tapped into the Mobile Revenue stream yet; That's going to be huge. My money is on Facebook. Buy the stock on the 1st day of the IPO and don't touch it for 5 years. I think it will easily be worth 5-10X the initial investment. I'm a big user of Facebook, so buying the stock is my way of getting some good monetary return on my use. FYI, a lot of detractors once said that Google's IPO was too costly for the individual investor. Well, I think those people who bought on Day 1 of the Google IPO are quite happy with their 7X return and are smiling on their way to the bank. :)

[jp837]

08:23 AM on 04/06/2012

Actually, if you had bought Googles' stock on the day of the IPO, and held it until now, you would have 7X your money. That's a very good return, and the tax on the profits would only be 15%, according to the capital gains tax law. Groupon is not at all like Google. Groupon had much lesser profits that Google had at it's IPO debut. And most importantly, Groupon has a replicable business and there are hundreds of similar deal sites throughout the world. Google is the predominant search engine and has a huge market share in its' industry, beating out Yahoo search and MSN search. Groupon has one product and they competition from everywhere: Living Social, Amazon Deals,etc.

[CarbondaleKid]

05:25 AM on 04/04/2012

Chicago based, staffed by a bunch of smart guys cracking wise...oh yeah...Wise Guys! Who'd have guessed the M.O.B. would be involved in Chicago! A Ponzi scheme.

[Andrew Edgar]

12:35 AM on 04/05/2012

Someone's a jealous down-stater.

[KenInd]

05:05 AM on 04/04/2012

Groupon offers no product that cannot be offered by someone else in a slightly different form. It does not seem to have a potential to evolve into a newer product when competitors challenge it. It is an idea of the moment and, as such, is unworthy of any long term investment.

Those who got in at the IPO and then sold made some money. Those who hung on haven't - and won't. Bad luck. Next time, do your homework.