Activist investors are closing in on Groupon as its stock plummeted to less than $3 a share, and its chief financial officer, Michael Randolfi, resigned, The Wall Street Journal reported Monday (Sept. 2).
At the time of its initial public offering in 2011, Groupon was valued at $16.5 billion; now it’s about $1.4 billion. Investors are hoping management will consider a stock buyback, a tactical partnership or selling the company.
Groupon’s game plan was to increase its valuation by expanding its subscription base, a strategy that isn’t sitting well with investors. Activist groups are among other investors trying to expand their influence, sources told the WSJ.
“It is time to do something more impactful,” said Robert Chapman, founder of California investment firm Chapman Capital LLC, which now holds 1.5 percent of Groupon stock.
Chapman is working to get shareholders to push Groupon management to sell the company or buy back $100 million worth of shares.
“People are coming around to my view,” said Chapman.
Groupon Chief Executive Richard Williams remains “actively engaged” with its shareholder base, the company said in a statement.
“We are committed to having an open dialogue with all of our shareholders,” a Groupon spokesperson told the WSJ last week. “However, we do not comment on rumor, speculation or hypothetical situations.”
Share prices have dropped about 38 percent since Williams became chief executive in November 2015.
As a way to boost earnings, Groupon recently entered into a distribution partnership with internet and media company Prodege. The goal is for Prodege to provide its customer base with more money-saving and rewards-earning opportunities.
The partnership gives Prodege card-linked offer content for local restaurants and other merchants. Prodege members will be able to load Groupon card-linked offers onto an eligible payment card and receive cash back or points redeemable for other retailers’ gift cards.
It also launched a membership program called Groupon Select offering additional discounts.