Class Period: Nov 4, 2011 to Mar 30, 2012
Lead Plaintiff Deadline: Jun 2, 2012 + Deadline passed
Summary of Case:
A securities class action has been filed against Groupon, Inc. ("Groupon" or the "Company") on behalf of all persons who purchased or otherwise acquired the common stock of Groupon between November 4, 2011 and March 30, 2012, inclusive (the "Class Period"), and/or who acquired shares of Groupon common stock pursuant or traceable to the Company's false and misleading Registration Statement and Prospectus issued in connection with its November 4, 2011 initial public offering ("IPO"). This case has been filed in the USDC - Northern District of Illinois (Eastern Division).
The Complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company's business practices and financial results. Specifically, defendants failed to disclose negative trends in Groupon's business and made false statements as to Groupon's financial results. As a result of these false statements, defendants were able to successfully accomplish Groupon's IPO at $20.00 per share, and subsequently Groupon's stock traded at artificially inflated prices during the Class Period, reaching a high of $26.19 per share on November 18, 2011.
On November 3, 2011, Groupon announced the pricing of its IPO of 35 million shares of common stock at $20 per share (not including an overallotment option granted to the underwriters to purchase up to an additional 5.25 million shares), for net proceeds of $658 million, pursuant to the IPO.
As part of the Prospectus and Registration Statement issued in connection with the IPO and during the Class Period, defendants represented that the Company had competitive advantages which would benefit its business and reported financial results which showed dramatic growth.
On March 30, 2012, after the market closed, Groupon issued a press release announcing a revision to its fourth quarter and full year 2011 financial results. The Company reported a reduction in its fourth quarter 2011 revenue of $14.3 million after initially reporting sales of $506.5 million. This resulted in an increase to Groupon's fourth quarter 2011 operating expenses that reduced operating income by $30 million, net income by $22.6 million, and earnings per share ("EPS") by $0.04. Groupon attributed the revisions to a shift in the Company's fourth quarter deal mix and higher price point offers, which resulted in higher refund rates.
On this news, Groupon's stock dropped $3.10 per share to close at $15.28 per share on April 2, 2012, a decline of 17% on volume of 10 million shares.
The true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows:
(a) Groupon's financial results were materially false and misleading in violation of Generally Accepted Accounting Principles ("GAAP");
(b) Groupon's revenues were overstated in violation of GAAP;
(c) Groupon's business was not growing to the extent represented by defendants and was not nearly as resistant to competition as suggested by defendants;
(d) The IPO Registration Statement and Prospectus concealed that Groupon was not in compliance with the laws and regulations of some of the countries in which it operated, including the United Kingdom; and
(e) Groupon's internal controls were so poor and inadequate that Groupon's reported results were not reliable.
As a result of defendants' false statements, Groupon's stock traded at inflated levels during the Class Period. However, after the above revelations seeped into the market, the Company's shares were hammered by massive sales, sending them down 41% from their Class Period high.
If you purchased this company's shares during the Class Period and suffered a loss or for further information about the case, please review the links below.