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Groupon shares drop amid concerns over low merchant offers

By , ZDNet Asia on January 4, 2012 

 

Summary

Daily deals giant sees shares fall over 6 percent on worries that merchants are retreating and company lacks plans to feature as many deals, according to report.

Topics

ipos, financial markets, business, stock markets, stock offerings, stock prices, groupon, jeffrey houston, market analysis, industries

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Groupon shares fell 6.6 percent on Tuesday after a survey from Susquehanna and Yipit showed that the site might not have as many daily deals to offer due to several merchants pulling back.

According to a Reuters report Tuesday, Susquehanna Financial Group and daily deals tracking company Yipit surveyed over 400 merchants on their experience offering online daily deals with Groupon, LivingSocial and other site providers. The study indicated that 80 percent of merchants enjoyed working with daily deals companies.

However, 52 percent said they were not planning to feature deals over the next six months and almost 24 percent of merchants intended to feature only one deal in the next 6 months.

"Our proprietary merchant survey highlights concerns of the daily deal sites and early read implies lower usage over the next six months, despite some surprisingly high satisfaction rates," Herman Leung, analyst at Susquehanna, wrote in a research note detailing the survey findings. 

Groupon's shares closed at US$19.27 on Tuesday, below the company's initial public offering price of US$20. Launched in November 2008, the daily deals giant completed one of the biggest Internet IPOs in November last year.

Howevevr, Jeffrey Houston, analyst at Barrington Research Associates, told Reuters that Groupon had a "large backlog" of merchants in line to run deals. "I suspect that the stock will be very volatile for the next six months or so, but it will outperform the market by the end of the year," Houston added.

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