Deals

Groupon shares tumble to new low after lock-up expires

Deal or not, plenty of Groupon insiders are opting to unload shares in their first opportunity since the company’s public debut, and they’re helping send Groupon’s share price tumbling to new lows Friday.

Groupon, which debuted on the NASDAQ in November, is trading down nearly 10 percent today, sinking to an all-time low of $9.53 a share at one point Friday. The dramatic drop-off can be attributed, at least in part, to an influx of roughly 600 million shares — or 93 percent of all outstanding shares — now available for trading thanks to the June 1 expiration of the stock’s lock-up period.

The volume of shares traded Friday at the time of this report is already nearly triple the number of shares traded Thursday.

Groupon insiders holding the 600 million shares, which include employees, executives, venture capitalists, and board members, were previously barred from trading their shares in a standard lock-up arrangement. These no-sale periods are meant to add stability to the stock of a newly traded company. Groupon elected to extend its lock-up from May 2 to June 1 following the disastrous revision of its fourth quarter earnings.

The daily deals company’s stock has been struggling on the public market ever since its debut, and the company was punished especially hard by Wall Street after the restated report in March. A strong first quarter 2012 earnings report of $559 million in revenue and $33.9 million in operating income and recent strategic acquisitions in the local commerce space, however, were helping the stock recover a tad in recent weeks.

Brokerage firm Sterne Agee even upgraded Groupon to a buy and gave the company a 12-month target price of $20 (the original IPO price) following the Q1 2012 earnings report. With the current share price at half the IPO price, many insiders, including Mason and co-founders Brad Keywell and Eric Lefkofsky, were not expected to sell their shares today.

But considering the stock’s drop-off Friday, it would seem that insiders are either concerned about Groupon’s future or the market’s reaction to consumer Internet companies and are happy to take what they can get.

GRPN Chart

GRPN data by YCharts

Photo credit: swanksalot/Flickr