Tech stock under pressure: Groupon Inc Common Stock (NASDAQ: GRPN)

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Groupon Inc Common Stock (NASDAQ: GRPN) stock plunged 25.97% on June 11th, 2020 and continued its bearish momentum falling over 1.3% on 12th June, 2020 (as of 11:27 am GMT-4; Source: Google finance)

The company announced a reverse stock split of the company’s common stock at a ratio of 1-for-20, after getting the approval of the reverse stock split by the company’s shareholders at the Annual Meeting of Stockholders held on June 9, 2020. The reverse stock split got effective on June 10, 2020. At the effective time & date, every 20 issued and outstanding shares of the Company’s common got converted and combined into one share of the Company’s common share. As a result there is a proportionate reduction in the Company’s number of authorized shares of common stock. Therefore the investors were selling their shares ahead of the reverse split. Though the reverse stock split is not the only reason for the heavy selling of the stock, the company has not been profitable from the past two years, and is anticipated to be not be profitable either this year or return to profitability any time before 2024 at the earliest, as per the analysts polled by S&P Global Market Intelligence. Furthermore, GRPN’s stock had plunged to $0.55 per share on March 16 and that raised fears amongst the investors that the stock might be delisted from the Nasdaq. A reverse split reduces the risk that Groupon to get delisted because shares today that trade for about $1.40 each should cost closer to $28 tomorrow, and thus abide with the Nasdaq’s listing requirements.

Meanwhile, in March 2020, the company had announced that Rich Williams will no longer remain as CEO and that Aaron Cooper, Groupon’s President of North America, has been appointed interim CEO by the Board of Directors. Chief Operating Officer Steve Krenzer also announced that he will no longer be serving in his role. However, Williams and Krenzer continues to remain as employees of the Company. The company is currently looking for a permanent CEO.

Additionally, in the fourth quarter of 2019, the company after a comprehensive review of opportunities and strategic alternatives, was determined to exit the Goods category which is rapidly migrating from offline to online. The company was a market leader in Q4, yet they had less than 1% market share and the results of the quarter made the company clear that they are not well-positioned in a saturated retail market.

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