Groupon went public in November 2011 at $20 per share to much over-hyped fanfare as is now the norm on Wall Street.
The stock ran up to over $30 then plunged below the IPO price as it became painfully aware to investors that there was more fluff in Groupon’s business model and hocus-pocus accounting practices than Donald Trump’s comb-over.
Now, at precisely the moment the ‘lockup’ expired, that point at which Groupon’s founders are free to sell their shares on the open market, it appears these insiders are dumping the stock like they dump destructive deep discounts on unsuspecting retailers.
As of this print Groupon is trading at $9.66, down 9.21% for the day, and down a whopping 69% from its high of $31.14 – and the stock is barely six months old.
What makes Groupon’s obvious overvaluation so alarming is that now we have Facebook’s IPO – an IPO that will go down in history as a textbook example of how Wall Street over-hypes a public offering, giving the stock an initial ‘pump’ and hence an artificial price, then institutional investors who got the stock at the IPO price (or lower) dump the stock at peak prices leaving the retail investor holding on for dear life as the roller coaster car plunges to the ground.
And now, in the case of Groupon you’ve got management obviously offloading their shares the moment they are legally able. It doesn’t say a lot for their faith in their own business. It will be very interesting to see what happens when the Facebook lockup expires.
