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Groupon shares free fall 21% as investors react to wider first-quarter loss

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Groupon shares tumbled on Wednesday, falling almost 21 percent, as investors reacted to the Chicago-based online deals company's report a day earlier of a wider first-quarter loss, the Chicago Tribune reported yesterday. Groupon stock lost $1.39, or 20.7 percent, to $5.33 on Wednesday. It's now near a year low of $5.18.

Groupon lost $37.8 million, or 6 cents per share in the first three months of the year, compared with a loss of $4 million, or a penny per share last year. Revenue jumped 26 percent to $757.6 million from $601.4 million in the same period a year ago.

The Wall Street Playbook is suggesting this pricing of the stock could reignite a bid for Groupon by Google. Google had once made a $6-billion bid for Groupon and its shares are now 23% cheaper than Google's initial offer price.

The Wall Street Playbook said, "I wouldn't rule out the possibility of Google coming back to the table with an offer."

"Groupon just became its own best deal," added the Wall Street Playbook.

There was even a suggestion that "With these shares still down significantly, Groupon becomes a possible acquisition target for Facebook (FB), which has made it clear that it wanted to get into the deals business as a way to grow more advertising."

Analysts expected that Groupon would report a first-quarter loss of 3 cents a share. In spite of the losses, the Chicago Tribune says that more analysts recommend to buy Groupon stock than sell.

The company was launched in 2008 as a daily deals website and has been working to change its model from a site that blasts out deals via email to a discount-offer service.

But with the uncertainty of change, Groupon stock has struggled to find buyers of its stock, even after a 40 percent drop in price this year. Groupon’s stock has traded below its initial public offering price of $20 for more than two years; leaving it among the worst performing stocks in the Russell 1000 Index this year.

The company has also spent more on marketing and acquisitions recently, purchasing South Korean e-commerce marketplace Ticket Monster Inc. in November for $260 million. It also purchased online fashion retailer ideeli Inc. in January for $43 million.

Sources:

Chicago Tribune - Groupon shares tumble 21 percent

Wall Street Playbook - Groupon Becomes Its Own Best Deal For Google Or Facebook

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