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Groupon Shares Drop On Concern Of Merchant Participation

Groupon shares were down 7.4% at $19.10 today during afternoon trading, dipping below the company’s initial public offering price of $20, after a survey by Susquehanna Financial Group and daily deal industry tracking firm Yipit revealed that more than 50% of merchants are not planning to feature deals with the online retail discounter, according to a Reuters story. Although 8 out of 10 merchants surveyed indicated they enjoyed working with daily deal companies such as Groupon and LivingSocial, 52% say they have not locked into future deals in the next six months, and close to 24% say they will only feature one deal in that time period. Here is more from Reuters:

Groupon

Groupon shares were down 7.4 percent at $19.10 during afternoon trading on Tuesday, below the company’s initial public offering price of $20. 

Last year, Groupon completed one of the largest Internet IPOs since Google’s debut, but the Chicago-based company’s business model has been questioned by some analysts.

A crucial part of the company’s business involves persuading merchants to run deals and accept the large discounts that are integral to the offers.

“Our proprietary merchant survey highlights concerns of the daily deal sites and early read implies lower usage over the next six months, despite some surprisingly high satisfaction rates,” Herman Leung, an analyst at Susquehanna, wrote in a research note detailing the survey results.