As just about everyone who watches these things predicted, Groupon's shares declined 9% just as soon as insiders were able to start trading them:
Friday marked the end of the company's lock-up period, which prevented insiders from unloading their Groupon stock. Groupon went public in November with a small float. The expiration of the lock-up period puts into play 600 million shares, amounting to 93 percent of the company's total outstanding shares. About one-third of those shares will not be sold, as they are in the hands of co-founders Andrew Mason, Eric Lefkofsky and Brad Keywell. Mason, who is also chief executive, said last month that the trio had no intention of selling their holdings.
Analysts had said they expected downward pressure on Groupon's shares as a result of the lock-up expiration but that many insiders -- a group that includes current and former senior executives, board members and early investors -- would hang onto their stock to wait for a rebound in the price. While Groupon's shares rebounded last month after the company reported first-quarter earnings, they remained well below their IPO price of $20.
Why did Groupon even have an IPO? Probably for the same reason Facebook did: to enrich the VCs and founders. That's easy. But why did anyone buy Groupon at $20 or Facebook at $38? Because math class is tough, but history is tougher, apparently.