No matter what they do, most people expect things to go their way if they apply themselves to the job, and when people don’t quite get there the frustration is overwhelming.
Some of the investors in Groupon, Inc. (NASDAQ:GRPN) may be experiencing such emotions. Despite the management’s efforts and the growing revenues, the stock of the company has been losing value since the IPO in November, 2011.
Since then, Groupon has lost 70%+ of its market cap representing approximately $15 billion. A part of the loss came because of the disappointing results for 2011, but that’s not the whole story.
The numbers for the first quarter of 2012 were significantly better, but couldn’t stop the devaluation in the long run.
While shareholders are looking at diminishing investments, the management of GRPN are enjoying hefty compensations. For 2011 Jeffrey Holden, Senior VP, got about $13.5 million. A truly staggering number, except about $11.5 of the compensation came in the form of stock awards.
That basically means Mr. Holden has seen about $8 million of his compensation vanish into thin air. Still, this is hardly any consolation for the shareholders who don’t get seven-digit bonuses or salaries.
It should be noted that the lockup ended on June 1 and so far insiders have abstained from selling, except for one automatic sale of 18 thousand shares pursuant to a 10b5-1 plan.[BANNER]
At this point shareholders’ hope may be mostly based on ideas of the future development of Groupon, and the future is one thing which is never certain.
Groupon’s success will largely depend on growing its customer base, and the business model of the company leaves it exposed to a lot of competition. On the other hand, discount offers have proven to be very attractive and in some cases addictive. So the question of what may happen to the money of the people who have invested in Groupon is still very much open.
