Most Early Groupon Stock Flippers Lost Money

We know that Groupon’s founders, board members and significant stakeholders did pretty well from the company’s public offering.

But what about the unknown investors? The ones who purchased the stock on the first day, or picked it up a few days later?

To find out those answers, a San Francisco company called SigFig culled its database, which includes more than $20 billion in investment assets from its users, to gain insight into how private investors actually fared from the daily deal leader’s IPO.

Today, Groupon’s stock is up 26 cents, or 1.1 percent, to trade at $24.33; it has stayed fairly constant after closing more than a week ago at $26.11.

Here’s what SigFig found:

  • 22.3 percent of people who bought Groupon’s stock on the day it went public dumped the stock that same day.
  • The average purchase price on day one was $28.17, or well above the company’s $20 initial price. At one point, the stock went as high as $31.14.
  • Even though Groupon ended the day up, almost two-thirds (62.5 percent) of people who sold off their stock on opening day lost money. The average negative return was 3.3 percent.
  • People showed hometown pride: The highest percentage of investors came from Chicago, where Groupon is headquartered.
  • For those who bought and sold on day one, Groupon’s IPO performed better than Pandora, but not as well as LinkedIn. Those who flipped Pandora’s stock lost an average of 8.52 percent; those who flipped LinkedIn’s stock made an average of 7.10 percent.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work