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BY MATTHEW PICHT
ANCHOR ANA COMPAIN-ROMERO
A dark day on the stock market Friday turned even darker for internet coupon site Groupon.
The company’s stock plummeted to record lows. Bloomberg explains what happened...
“Here’s the situation--the insiders, they are now allowed to sell. The lockup period
has expired and the coupon site has been attempting to rebuild investor confidence. Obviously
not going so well.”
Like many IPOs, Groupon’s inside shareholders were required to hold onto their new stock
for six months before selling. When the six-month period expired, more than 600 million shares
flooded the market—and the stock price nosedived.
Early on Friday Groupon shares dropped almost 10%, prompting an automatic cutoff in short
selling of shares. The stock closed at $9.69, less than half of the IPO price.
The price was driven down primarily by investor fears of a mass exodus by Groupon insiders.
But while more shares are available on the market, an analyst told NBC that Groupon insiders
might not be as willing to sell as investors believe.
“If you look at valuation right now, it’s roughly less than half of where those insiders
actually redeemed...*FLASH*...I think that they’ll probably wait for a better exit
point.”
However, shareholder confidence isn’t exactly soaring at Groupon, especially in light of
Facebook’s recent IPO flop. As VentureBeat points out, the amount of trading before the
cutoff indicates at least a few insiders wanted out no matter the price.
“The volume of shares traded Friday at the time of this report is already nearly triple
the number of shares traded Thursday...it would seem that insiders are either concerned
about Groupon’s future or the market’s reaction to consumer Internet companies and
are happy to take what they can get.”
Groupon’s stock woes place the company’s value at $6.3 billion. CNN Money reports,
Groupon execs might be kicking themselves right now for deciding to go public.
“Groupon allegedly turned down an offer to sell the company for six billion dollars
to Google last year. So that might turn out to have been a big mistake if Groupon stock
continues to fall.”