Feeds

Groupon shares plunge: Drain in sight

Cyber Monday not a good day for coupon site

Internet Security Threat Report 2014

On Cyber Monday, a day when tech firms are supposed to be doing quite well, Groupon saw its shares take another tumble on the Nasdaq, landing firmly below the IPO price at $15.24.

The daily deals site has seen its stock plummet in the last 10 days, dropping 41 per cent from $26.19 on 18 November, including a 9 per cent fall yesterday alone.

The shares sold for $20 each in the IPO and opened on the market at around $26 on November 4.

Before the big shopping weekend in the US, analysts had been speculating that the lack of good bargains on the site might be to blame for the lack of interest in from investors, especially since rival LivingSocial was going all out on Black Friday/Cyber Monday goodies.

But analyst Herman Leung at Susquehanna Financial Group pointed out to the Wall Street Journal that other internet company stocks have been taking something of a knock in the last two weeks as well.

LinkedIn lost 4.88 per cent yesterday, adding to a fall from 4 November of 29 per cent, from $85 to $60. (Although a recent round of financing might have something to do with that).

And even well-established stocks such as those of Amazon have been a bit off, dropping from $217.62 on 4 November to $194.15 yesterday – although that included a rise on Cyber Monday of 6.44 per cent as the etailer did well out of the shopping frenzy.

So it's possible that online stocks, particularly social networking ones, are just starting to feel a little too uncertain in the gloomy, double-dip-fearing global economy.

However, yet more analysts are still concerned about the business underlying Groupon stocks.

When it started the initial public offering process, hopes were high for the coupon site, but once it opened its accounts, doubts started to creep in.

Quite apart from the well-known accounting metric gaffe that made Groupon look like it was trying to fudge the numbers, the simple fact was that the site had yet to make any profits, leading analysts to speculate that the business model just wouldn't work.

Yesterday, Endpoint Technologies Associates analyst Roger Kay raised that notion again with Marketwatch.

“These guys always struck me as an overblown boiler room operation,” he said bluntly in an email. “I’m not surprised to see them lose value as fast as they have.” ®

Internet Security Threat Report 2014

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Special pleading against mass surveillance won't help anyone
Protecting journalists alone won't protect their sources
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Apple's iPhone 6 first-day sales are MEANINGLESS, mutters analyst
Big weekend queues only represent fruity firm's supply
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Bill Gates, drugs and the internet: Top 10 Larry Ellison quotes
'I certainly never expected to become rich ... this is surreal'
Big Content Australia just blew a big hole in its credibility
AHEDA's research on average content prices did not expose methodology, so appears less than rigourous
EMC, HP blockbuster 'merger' shocker comes a cropper
Stand down, FTC... you can put your feet up for a bit
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.