In the fall of 2010 Google, Inc. approached the team at Groupon and offered them $6 billion in order to acquire the world’s largest “social shopping” portal, a deal that Groupon turned down as many investors pinned the company for a $10 billion valuation.
Fast forward less than two years later and amid poor performance and accounting snafus Groupon stock began trading at $9.30 on Monday morning with all signs pointing to more losses. At the company’s current price point Groupon is worth just around the $6 billion Google has offered and pricing for the company’s shares are expected to trend downwards.
The fall from grace happened quickly at Groupon which debuted in November at $20 per share but soon lost steam when it was realized that Groupon’s actual cost for acquiring new customers was much higher than originally estimated. Despite issues with its accounting practices Groupon managed to beat expectations for Q1 earnings however insiders selling portions of their shares seems to have slowed any momentum the platform should have received from increased earnings.
Insiders were not allowed to begin selling their Groupon shares until June 1 in accordance with SEC guidelines and regulations. With insiders owning 93% of outstanding shares any large volume trading could remove any confidence traders may have gained from higher than expected earnings.
In the meantime I almost have to feel sorry for members of the Groupon team who wanted to sell out to Google several years earlier, they would have likely walked away with more money and potentially stable jobs working for the tech powerhouse.