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Groupon falls to all-time low, details budget background

Updated: December 4, 2012 6:11AM

Groupon’s stock fell Friday — one year after going public — by 5 percent to $3.83 a share, its lowest ever, after rival LivingSocial recently reported a revenue plunge and analysts worried that Groupon’s business is slowing too.

The Chicago-based daily deal site’s stock is now 81 percent off its Nov. 4, 2011, going-public share price of $20.

The Wall Street Cheat Sheet website called Groupon’s market valuation drop to $1.38 billion from $13 billion a year ago “arguably the worst of the three large Internet IPO busts of this era,” with the others being Facebook and Zynga.

Analyst Edward Woo of Ascendiant Capital Markets on Friday pointed to rival deal site LivingSocial’s third-quarter operating loss of $70 million, and concerns that the revenue decline “bodes poorly for Groupon’s revenue growth.” Groupon reports third-quarter earnings on Thursday.

Separately, Groupon told federal regulators that its Aug. 2 disclosure of a “material weakness” in its internal controls stemmed from the fact that the company’s accounting organization and its financial statement “close process” failed to keep pace with Groupon’s skyrocketing growth and several operational and organizational changes taking place at that time.

“We did not maintain financial ‘close process’ and procedures that were adequately designed, documented and executed to support the accurate and timely reporting of our financial results,” Groupon wrote in reply to the U.S. Securities and Exchange Commission’s questions.

The SEC made the questions and answers public on Friday.

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