Groupon slumps to lowest price ever

Monday, June 4th 2012. | Internet News

Groupon, the online deals site, hit a new bargain basement price on Monday, falling below $ 6bn (£4bn), the price Google offered for the company in 2010.

The Chicago-based firm was once described by Forbes magazine as the fastest-growing company ever – but it has struggled since it joined the Nasdaq stock market last November.

The company’s shares closed at $ 8.95 on Monday, down 7.64%, which left the firm valued at $ 5.77bn.

Groupon’s shares fell heavily last week when insiders were given their first opportunity to sell their holdings and seized the chance to do so. The shares ended Friday trading 9% down.

Groupon, which offers daily discount deals, was the first big initial public offering (IPO) of the new generation of social media companies.

While some analysts poured scorn on its sky-high valuation and were critical of Google’s offer, founder Andrew Mason was dismissive of Google’s $ 6bn price tag, believing the firm was worth far more.

According to Groupon’s Biggest Deal Ever, a book by Frank Sennett on the company’s rapid rise to prominence, Mason believed that Groupon could be more than 10 times larger if it “fully optimised its data processes”.

The company made its debut on Nasdaq last November, selling shares at $ 20 apiece, making the company worth $ 12.65bn.

The shares initially soared, coming close to $ 30, but have been on a steady downward slide since February.

In March the company announced better than expected profits, lower marketing costs and expanding overseas sales. The shares briefly rallied but have still fallen 52.7% in the past six months.

The company is not the only former high-flying tech star to have got off to a bad start this week. Shares in BlackBerry maker Research in Motion (RIM) slid below $ 10 on Monday.

Last week, RIM appointed bankers to assess its options as sales have continued to slide, and the company said it expected to report a loss this quarter.

Facebook’s shares, too, continued to slide. Shares dipped to $ 26.90 on Monday, more than $ 10 less than the $ 38 price set at its IPO last month.

The shares at hit a record low of $ 26.79 earlier in the day after analyst Sanford C Bernstein & Co launched coverage of the company with an underperform rating and a $ 25 target price.

“It is difficult to argue for owning the stock today,” Carlos Kirjner, an analyst at Bernstein in New York, wrote in a research report.

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