By Scott Rubin
Shares of daily deal site Groupon, which completed a highly anticipated IPO earlier this month, have collapsed this week. Early this morning the stock was trading beneath its $20 IPO price and well below the $26 range, where it started trading on the NASDAQ. In fact, if the stock falls another $4.30 this week, it will have lost half its value since Friday’s close.
During Wednesday’s trading hours, GRPN had shed another 14%, and has been down double digit percentages all three days this week. At the time of this article, the stock was trading at $17.30, compared to a close on Friday above $26.00. Wednesday’s sell-off is coming on high volume with 5.4 million shares already trading at mid-day, compared to a full day daily average volume of 6.7 million.
The Street.com quotes Hudson Square Research analyst Daniel Ernst as saying “The market is throwing out anything with high risk and uncertainty, including companies that don’t have a lot of operating history.” It would appear, however, that something else is driving the sell-off rather than vanilla risk aversion.
Rival Living Social announced Black Friday deals this week in partnership with over 20 national retailers, and the decline in GRPN may be related to fears about Living Social taking away market share. TheStreet.com also notes that it became easier for traders to borrow GRPN shares last week in order to short-sell them, which may be affecting the price.