Groupon features a daily deal on the best stuff to do, see, eat, and buy in Seattle and a variety of other cities across the United States.
Groupon Shares Are Falling Like There’s No Tomorrow
The flirt Groupon had with an inflated share price seems to be over. For the second day running, the popular daily deals website has seen its share price plummet—almost trading below the $20 that Groupon came in under its recent IPO.
The decline was somewhat of a surprise for many analysts because although many felt Groupon’s share price was grossly overvalued, many had anticipated that it would be a while before the market corrected itself. Groupon itself seems to be reeling from shock and early reports are that management are seeking to allay fears.
Other shares in the tech sector saw a decline too—although not for the same reasons underlying the Groupon drop. LinkedIn’s shares fell sharply and traded 7% down on the selling off of shares by employees and investors who were exercising their right to sell post lock-out period.
Groupon’s lock-out period ends May 2012, so the sharp decline in its shares cannot be blamed on this sort of activity. The most likely scenario is that a sizable pool of investors are now just cashing out their value in the company which would have increased given the IPO mania that surrounded Groupon.
Perhaps the only hope for the share price is some dose of good news for the industry as a whole. Daily Deals as a business model has long since been questioned regarding viability and only a sharp turn in consumer behavior can reverse that consensus.
Is Groupon finally going to go under? Share your thoughts on its predicament in the comments below.