Shawshank, VA 11/22/2011 (StreetBeat) – Groupon(Nasdaq:GRPN) shares plunged 13% to $20.50 on Tuesday afternoon, falling close to their $20 IPO price.The daily deals company, which raised $700 million in its public market debut two weeks ago, saw shares rise 40% on their first day of trading.
The stock fell as low as $20.03 on Tuesday, and volume of 2.8 million looks relatively strong, despite the issue's short trading history, on pace for the biggest churn the shares have seen since Nov. 9.
This initial pop in stock price came despite shake-ups among Groupon's management team, scrutiny over its accounting metrics and concerns about its long-term ability to turn a profit.
Chicago-based Groupon is also facing heavy competition from tech giants like Amazon(Nasdaq:AMZN) and Google(Nasdaq:GOOG), as well as 600 other entrants.
A recent study by social media marketing company iContact found 70% of small business owners "hate" Groupon. The site has been criticized by businesses for not providing them with repeat customers and diluting their brand.
Founded in 2008 by CEO Andrew Mason, Groupon has expanded rapidly to more than 10,000 employees by offering discounts on services like yoga classes and massages. Revenue swelled to $312.9 million in 2010, compared to $14.5 million in the year before.
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