This was the most influential statement to me:
"Altogether, $946.8 million, or roughly 86% of the funds raised across the three investments, was paid out to Groupon directors, officers and stockholders" (mashables et al on Groupons original IPO)
If the insiders drew money from the company like crazy, why would outsiders pump more money in? What do they know that other don't??
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%Insert anti-Republican truth that Fox never reports here%
Groupon shares have broken below their initial public offering price of $20 and may cast a pall over other technology debuts on the public markets.
Groupon shares fell throughout the day and closed at $16.97.
What happened?
For starters, Groupon has significant question marks as a business and competition from Amazon backed Living Social will be tough. In addition, it’s easier to borrow shares of Groupon to short them, reported Bloomberg. A short sale occurs when you borrow shares betting that they will fall. You sell shares back lower and pocket the difference.
If any stock had enough question marks to attract shortsellers it would be Groupon.
Wedbush Securities started coverage of Groupon with a neutral rating on Nov. 17 and summed up the situation.
While Groupon has done a great job creating the fast growing market of daily deals email marketing, we believe that its leadership position is facing challenges by many new competitors. In addition, industry growth rates are likely to slow down as consumer fatigue sets in or the market reaches saturation with merchants and consumers.
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