Groupon Shares Plunge, Trading Close to IPO

http://www.bloomberg.com/news/2011-11-22/groupon-shares-plunge-for-second-straight-day-trading-close-to-ipo-price.html

by rgarcia • 15 years ago

50 28 15 years ago

mikeryan• 15 years ago

Hmm I haven't seen them "plunge". I saw Them spike out the gate and gradually tail down. Which is pretty much what I expected.

Rinum• 15 years ago

13-14% drop today. That's quite a bit.

hack_edu• 15 years ago

Why so much of a drop today? Has any news come out recently besides the fuzzy numbers and growing competition?

LokiSnake• 15 years ago

It wasn't so much of a question of why, but when. I don't think any sane person expected Groupon to stay up there.

radicaldreamer2• 15 years ago

Markets don't act rationally day to day. In fact, many think that markets are only rational at spot moments and that irrationality is their default state.

polyfractal• 15 years ago

Was this really a surprise for anyone? The IPO has been a trainwreck since Groupon decided to start making up financial metrics.

feralchimp• 15 years ago

"The so-called borrow rate, or fee imposed by brokers on traders who want to sell short, has dropped to about 30 percent from 99 percent earlier in the month, Leung said. At 30 percent, Groupon’s shares would have to decline by at least that much before the trader makes a profit."

I must be missing something...

When I buy shares, I don't get to inform the broker that the stock needs to go up by 30% before they can execute my trade at today's price.

Betting on a stock to dip 5% seems like a big enough risk that I should be able to make money on it. 30% just sounds crazy.

jpdoctor• 15 years ago

> I must be missing something..

When you borrow shares to short, the person you are borrowing them from (usually a broker) specifies a fee. Your quote from the article is saying that the fee is 30% (which is friggen huge, but is part of the manipulation that occurs with a hot IPO.)

esrauch• 15 years ago

How could the fee be 99%? Doesn't that imply that anyone who takes the short is damn sure that the stock will be worth $0?

antr3• 15 years ago

many people have made heaps of money these past days shorting grpn. let's wait and see what happens by the time the 180 day lock-up expires.

the risk with shorting grpn today is the small free-float given that it's easy to create demand with small amounts of capital. it's a no brainer that when the lock-up expires this stock will fall like a brick.

gujk2• 15 years ago

If it's a no-brainer, why aren't short sellers flooding the market and driving down the price to the post-lockup price?

rokhayakebe• 15 years ago

Isn't it still up from where it started?

bryanh• 15 years ago

Yes, about 2-3% above $20, the stated IPO.

antr3• 15 years ago

not really. it wen't public at 26+$/share. only if you had put an order (as an institutional investor, prior to going public i.e. traded) you would of been able to get in at $20/share.

tptacek2• 15 years ago

Most 2011 tech IPOs are unhappy today. The market is volatile and bearish. In the absence of news, you can't interpret stuff like this --- especially given the fact that Groupon doesn't have a listed competitor --- without understanding where the whole market is at.

ila2• 15 years ago

that is no explanation: - investors do not consider Groupon a tech company (it's all over the research reports) - Google, Intel are down marginally (non retail), Apple is up (tech retail). Nasdaq is ONLY 0.07% down. - Falling 14% is intrinsic to the stock, not the market.

tptacek2• 15 years ago

Google, Intel, and Apple aren't unproven '11 IPOs. Look at Pandora, Zipcar, etc.

pathdependent3• 15 years ago

As an indicator, my short position was closed out on Monday by my broker -- they couldn't find shares to borrow anymore.

radicaldreamer2• 15 years ago

Might be time to go long then.

gujk2• 15 years ago

How does that work? When you short, you immediately sell the shares you borrowed. Why aren't those shares available to be re-borrowed from the new owner? The only reason I can guess is that the new owner isn't connected to the liquidity system, which I would guess would have been a solved problem by now.

pathdependent3• 15 years ago

http://www.sec.gov/rules/final/2009/34-60388.pdf

rythie2• 15 years ago

If Groupon could cut costs by using a self-serve model (rather than 1000s of sales staff) it could drastically cut costs and potentially make a large profit.

Surely at some point in the next few years they will be well known enough for businesses to go to them, instead of the other way around?

philwelch2• 15 years ago

That assumes that Groupon is actually beneficial to the business that does one.

They also need to manage the "coolness" and variety of offers and write snarky copy, so self-serve wouldn't necessarily bring it to break-even.

rythie2• 15 years ago

In the long term they do need to be beneficial to the businesses that do it, otherwise they'll die in a few years from word of mouth.

Who writes the copy is an issue, though just someone writing that would be cheap compared to chasing tons of businesses looking for work and talking to them all.

Groupon Shares Plunge, Trading Close to IPO

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