Groupon Stock At Lowest Level Since IPO
By Chuck Sudo in News on Jul 13, 2012 7:40PM
It's been a while since we checked in on the death drop known as Groupon's stock price. Let's see how that's going.
The Christian Science Monitor noted that Groupon stock on Wednesday hit its lowest price since its November 2011 IPO, to $7.72 a share, before rebounding slightly at closing. One factor believed to have contributed to that performance was the payday loans for small businesses online daily deal pioneer's web traffic, which dropped15 percent in last over June 2011, according to online trends tracker ComScore. Other possible factors in the stock performance were concern over Groupon's entry into Europe and its volatile economy and the announcement that Groupon co-founder Eric Lefkofsky was stepping down to focus his energies on his venture capital firm, Lightbank. Or it's entirely possible June isn't the month for half-off teeth whitening treatments.
The stock value is so low at this point that venture capitalists who invested in Groupon before the IPO are now losing money on the stock. Wednesday's stock plunge ended up valuing Groupon at $5 billion, less than the $6 billion offer the company rejected from Google in 2010.
Yet, despite the stock's performance, Wall Street analysts and others in the tech sector still are bullish on Groupon. Sure, a $5 billion valuation isn't near the $16.5 billion valuation the company had after its IPO, and some budding start-up entrepreneurs, like those who call Merchandise Mart tech hub 1871 home, wouldn't blink twice at $5 billion.
“If you tell me that my company [will] be the failure that some perceive Groupon to be, I would be thrilled,” said Erik Severinghaus, the founder and CEO of Simple Relevance, a startup that helps companies target emails to consumers. “Getting to an IPO, regardless of what happens after, is a massive success for anybody.”
A Goldman Sachs research note referenced in an MSNBC report said the concern over Groupon's stock performance is overblown.
“We view GRPN as driving the secular shift in local retail and consumer behavior through innovation of curated, location-based, relevant offerings.”
Possibly the biggest factor, according to Raymond James senior analyst Aaron Kessler, is fatigue. “There is investor concern over the sustainability of the model," Kessler told MSNBC.
Back to the question: does Groupon's current valuation make the company a failure? We probably wouldn't blink twice at a $5 billion valuation, either. At least when regarding Groupon news these days the talk is focused on the company's short- and long-term health and not the antics of CEO Andrew Mason. That, at least, is progress.