Groupon reached a milestone today—its stock price dipped below its IPO price. Not exactly the most auspicious achievement. After launching at $20 per share and peaking at around $26 after the start of trading Monday, its hovering around $17 per share today.
Groupon is not alone in its post-IPO woes. There have been 41 tech IPOs this year, but the new class of companies has lost 13.1 percent of their value so far this year, according to the New York Times. LinkedIn, for example, has ridden a veritable roller coaster since its offering, plunging as low as $63.71 on June 20, peaking at $109.97 less than a month later, and dropping to around $66 per share as of this writing.
Much of that hints at the broader uncertainties in this market, and the desire for investors to keep their money in what they see as safer stocks. But the consensus on Groupon seems to be different from the rest. Analysts are questioning everything from the company’s business model to its growth prospects in Europe. To top if off, online coupon company has been plagued by bad press recently surrounding its deals. Many of the deals sell too well for small business owners to keep up with demand, forcing them to hire extra help and sapping profits.
To top it off, Groupon’s accounting practices in the run up to the IPO were not well received. Our own Anup Srivastava, an assistant professor of accounting, laid out a detailed critique of the company that should be required reading for any potential investor.
Today’s low may not be the best bellwether for the company—trading before holidays is often notoriously light, and today is no exception—but it certainly doesn’t bode well. The next few months may well be crucial to the company’s future.
Photo by swanksalot.