As you may recall, Groupon did a highly unusual stock deal about 10 months before its November 2011 IPO.
The company allowed its early investors to cash out big, selling $946 million-worth of stock to a host of new investors who were eager to get in on one of the fastest-growing companies in history.
This deal was a bonanza for early Groupon insiders and investors, including Chairman Eric Lefkovsky, who banked $318 million (to go with an earlier $67 million cash-out) and Andrew Mason, who took out a total of $31 million in that round and a prior round.
Importantly, the investors who bought this pre-IPO round weren't idiots. Rather, they were a who's who of smart money.
That pre-IPO cash-out was done at a split-adjusted share price of $7.90.
About 10 months later, Groupon went public at $20 a share. The stock soared over $30 the first day, and then settled in the low $20s. Then it began a slide that culminated in last week's close of $4.75, a shocking 75%+ below the IPO price.
Last week's closing price is also well below the price Groupon's last round of private investors paid in December 2010--almost 40% below it, in fact.
So the smart money that bought in that round is looking kind of dumb.
Read more in today's Business Insider.