Groupon (GRPN) Slides 30% from IPO Open; Investors Fear Overvaluation
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Groupon (Nasdaq: GRPN) shares are continuing to slide lower Wednesday, as investors grapple with the cold reality that...valuation might be overdone! (Hopefully, not like tomorrow's turkey!)
Here's a brief recap: from a close of $26.19 last Friday, the stock fell about 10 percent Monday, and overall closed 23.4 percent lower the last two sessions to $20.07 on Tuesday. Trading at $19.45 in pre-open trading Wednesday, shares are now down 31 percent from the November 4th IPO opening price of $28.
With the IPO pricing at $20, anyone who bought shares in the IPO are now underwater - never a good sign.
Competition from sites like Livingsocial, as well as giants like Google (Nasdaq: GOOG) and Facebook looking to get in the game.
Further, low-float IPOs by tech companies like LinkedIn (NYSE: LNKD) and Groupon make valuations unrealistic. At Groupon's IPO, only about 5.8 percent of outstanding shares were being floated.
And investors might want to pay attention. The Financial Times noted Wednesday that LinkedIn fell 25 percent following the announcement of an 8.7 million secondary offering in November, after expiration of a six-month lockup. The offering was larger than the 7.8 million offered during its IPO in May.
Shares of Groupon are 0.4 percent lower early Wednesday.
Here's a brief recap: from a close of $26.19 last Friday, the stock fell about 10 percent Monday, and overall closed 23.4 percent lower the last two sessions to $20.07 on Tuesday. Trading at $19.45 in pre-open trading Wednesday, shares are now down 31 percent from the November 4th IPO opening price of $28.
With the IPO pricing at $20, anyone who bought shares in the IPO are now underwater - never a good sign.
Competition from sites like Livingsocial, as well as giants like Google (Nasdaq: GOOG) and Facebook looking to get in the game.
Further, low-float IPOs by tech companies like LinkedIn (NYSE: LNKD) and Groupon make valuations unrealistic. At Groupon's IPO, only about 5.8 percent of outstanding shares were being floated.
And investors might want to pay attention. The Financial Times noted Wednesday that LinkedIn fell 25 percent following the announcement of an 8.7 million secondary offering in November, after expiration of a six-month lockup. The offering was larger than the 7.8 million offered during its IPO in May.
Shares of Groupon are 0.4 percent lower early Wednesday.
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