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(By Supantha Mukherjee, Reuters) – Exactly four years ago, Groupon Inc’s initial public offering was priced at $20, valuing the company at $13 billion.

On Wednesday, the stock fell 30 percent to as low as $2.79, giving the operator of daily deals website groupon.com a market value of less than $2 billion.

Such has been the precipitous decline of a company that was once considered an e-commerce posterboy.

Groupon reported yet another dismal quarter on Tuesday and announced a slew of measures to turn around its business, including spending $150 million-$200 million more on a marketing blitz.

But Wall Street analysts were not convinced.

“We understand the company’s investment in marketing approach but do not believe it solves the company’s underlying challenge, which is building a more compelling product that virally attracts users,” PiperJaffray analysts wrote in a note.

At least seven brokerages cut their price targets on the stock by as much as $5 to a low of $2.25. The median price target has nearly halved in the last three months to $4.00.

Competition has been tough for Groupon – it battles with Yelp Inc and GrubHub Inc for local dollars and with Amazon.com Inc, eBay Inc and Priceline Group Inc in its goods and travel business.

“Groupon is in a brutal industry – local internet advertising has been notoriously difficult,” Piper Jaffray analysts wrote in a note.

“Viral, simple products are key to solving local and we believe that Groupon’s efforts are best made there.”

Groupon also said its co-founder Eric Lefkofsky would step down as CEO and would be replaced by Chief Operating Officer Rich Williams.

One of Williams’ challenges will be to boost margins, which have been on a downward spiral. Gross margin in the third quarter was about 46 percent – a far cry from over 80 percent in 2011.

In a note titled “Dry Q3 EPS Results And A Desert Ahead…” RBC Capital Markets analysts wrote that Groupon would require a lengthy turnaround.

But, there might be some light at the end of the tunnel for the company that has nearly 50 million active users.

More than 800,000 businesses offer deals on its website – nearly half of Amazon and about 10 times more than Yelp, Evercore ISI analysts wrote.

(Reporting by Supantha Mukherjee in Bengaluru; Editing by Saumyadeb Chakrabarty)

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