Lockup cuffs on Groupon insiders came off yesterday — and shares of the daily deals company fell by as much as 10 percent.
The decline, which reached a new low of $9.53 about an hour into the trading day, helped destroy even more value in the Chicago-based company that’s desperate to rebuild investor confidence.
Mid-level employees hold about 10 percent of Groupon’s shares and higher-ups like CEO Andrew Mason and co-founder Eric Lefkofsky account for more than 30 percent of the share count, according to analyst Ken Sena of Evercore Partners.
“Groupon underperformed a little bit yesterday, and that would be attributed to the lock up,” Sena said, adding that investors were shunning the stock all week ahead of the end of the expiration.
Yesterday was the first time since the initial public offering that early shareholders, mostly employees, were allowed to cash-in shares.
The six-month lockup is typical. Groupon went public Nov. 11.
Still, the execs including Mason did not cash in, easing fears that a mass exodus was coming.
Most analysts don’t expect Groupon’s top shareholders to flee just yet while the stock is at such a low — more than 50 percent down from its IPO price of $20.
The company, which records revenues by selling discounts, has been hurt by a low barrier of entry for rivals.
Where it used to have the sector nearly to itself, now many companies are offering similar daily deals.
Groupon, Zynga and now Facebook have disappointed investors since their public debuts, and it is becoming a pattern for such stocks to take a beating as imposed restrictions on insiders selling shares come off months after the IPO.
Facebook has staggered lock-up periods, but the first for employees comes off after 90 days from last month’s debut.
“If investors are worried about the sell-off, the stock price will reflect it before that point,” Sena said.
Yesterday, Facebook continued its post-IPO swoon, closing down 6.4 percent to $27.72.
Zynga, which also had a lock-up expiration this week, continued to fall, closing down 4 percent to $6.01.