Poor performance on the stock exchange
A number of Groupon‘s pre-IPO investors are selling their shares, as a result of the company’s poor performance on the stock exchange that has seen the firm’s market cap fall from USD13.11 billion in December last year to USD3.1 billion.
Groupon’s early backers are cashing in, now that the ‘lock-up period’ has elapsed, where initial investors in a company cannot sell their shares on the open market until a certain amount of time after IPO. Investors such as Andreessen Horowitz, Fidelity Ventures, and Maverick Capital have shed either all or portions of their stakes in the company since its lock-up period expired in June, according to an investigation by the Wall Street Journal(WSJ). Andreessen Horowitz sold all 5.7 million shares it bought at USD7.90 each, having pumped in USD40 million months before Groupon went public. Fidelity Ventures and Maverick Capital invested in the same USD950 million round but have since reduced their stakes, with Fidelity cutting its total to 13.2 million shares between March and June this year and Maverick now holding just 2 million shares, down from 6.3 million at the beginning of the year.
The news follows revelations that Andreessen Horowitz founder Marc Andreessen and Groupon board member Howard Schultz both warned Groupon not to IPO when it did, fearing the additional scrutiny on its finances.
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