Groupon Stock Is Basically 50 Percent Off
By Samantha Abernethy in News on May 7, 2012 9:45PM
Shares of Groupon stock fell below $10 on Friday — that's down 50 percent from its initial public offering price of $20, and that's a 46 percent decrease since it announced its accounting problems. CEO Andrew Mason sent a letter to shareholders today with a little peptalk. He said, "Groupon has the opportunity to become one of the world's great companies."
“Though the six months since our IPO have been rocky to say the least, the fundamentals of our business have continued to improve,” he wrote. “Groupon is a marketing tool that connects consumers and merchants. Tomorrow, we aim to move upstream and serve as the entry point for local transactions.” ... “Why Groupon? Aren't we a daily deals company? A glorified mailing list?,” he wrote. “What our competitors have learned is that success in local commerce requires an unusual combination of skills — a proficiency in both technology and people-driven operations. With a world-class engineering team — built quietly over the last several years in Chicago, Silicon Valley, and Berlin — and with thousands of small-business owners, we believe that we are uniquely in possession of both sides of the equation.”
In this situation, NBC doesn't endorse the usual "buying low and selling high" strategy:
Those who subscribe to the notion that buying low, selling high -- we'll call them uninformed optimists -- might think now is the perfect time to buy. But Groupon has had its slippery slope of problems for quite some time now, and the reason its stock has taken such a beating is those problems are no small apples.
NBC reported last week that members of the sales team are leaving because of "declining volumes." CEO Andrew Mason took a paycut this year, and Business Insider found one SEC filing that listed Mason's salary $756.72.
There's no end to Groupon's drama. First quarter earnings will be announced in a week, so we'll see if there will be more of those "accounting corrections" in the weeks that follow.