Groupon investors get a kicking in the IPO

Investors who ignored warnings from Wall Street, and us, which said that the Groupon IPO was over-priced are probably considering looking for a nice tall building to fling themselves off.

The Groupon IPO, or, as we have dubbed it, the “ipoo” was horribly over-subscribed and hit the streets at $31.14 each. Even on the first day of trading it was clear that people wanted to off load them. Shares fell to $26.11 on the first day of trading.

Since going public on 4 November following a rough quiet period, Groupon shares were down 42 percent from the first day’s trading and people who paid the full price on the IPO day have lost half their money.

Groupon’s IPO was greeted with great skepticism by many analysts and investors. The outfit is losing money hand over fist because it has been spending shedloads on marketing and expansion.

It has seen some growth, but there are signs that this is stalling too. Rivals have sprung up and the barriers to market entry are fairly non-existent.

Groupon’s only way to stop itself from failing is to keep growing, but to do that it has to stop losing money.

To calm new investor’s nerves the outfit also has to have a solid quarter and it will not announce anything until late January. That is a long time for investors to watch their stock plummet.