You don’t need to work on Wall Street to have seen this one coming: Today, for the first time since its NASDAQ debut on November 4th, Groupon has fallen below its IPO price , which initially placed the company’s stock at $20 per share. The company’s stock opened (at first trade) at $28 per share, with a market cap of $17.8 billion. It’s currently hovering at about $17.30 per share, down nearly 14 percent on the day. The daily deal behemoth’s stock has been on a three-day slide, and this marks the third day in a row of double digit declines. This came after the stock hit its all-time (really, all-month since IPO) high on Friday at $26.19 per share.
Welcome to the public markets, Groupon. Some might say that, although Groupon was up 31 percent before this week, raised $700 million selling 35 million shares at $20 each before going public on November 4th — mind you, the biggest IPO since Google in 2004 — the decline was inevitable. That there’s no way that the company’s current performance (and short-term prospects) work out to a $15 billion+ market cap and sky-high valuation. (You can read our assessment of Groupon’s value in contrast with soon-to-IPO Zynga here .) But it also seems that the recent decline of Groupon’s stock is a result of just how many shares it sold at IPO. Groupon sold about 5.5 percent of its stock on November 4th (of its 637.3 million shares outstanding), meaning that a relatively small amount of stock was available to short sellers. As Crain’s points out , the premium to borrow shares (in advance of shorting) dropped from 90 percent to 30 percent early this week. And it looks like the short-sellers are moving fast and furiously. The next few months will no doubt be marked by a series of ups and downs, and it will be fascinating to see where Groupon’s stock bottoms out. I have no dog in the fight and, frankly, am optimistic about the company’s long-term prospects and want to see them be successful, but I think they have a long way to fall yet. More to come.
Follow GRPN’s movements here . Excerpt image from Marietta
