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Groupon Below $20 IPO Price, Attractive Discount or Lousy Deal?

On Wednesday the Fast Money pros were taking a long-hard look at Groupon after this former high flier slipped below Groupon's IPO price of $20.

As you may remember when Groupon made its initial public offering earlier in the month investors just couldn't get enough of this stock, as a bet it was the next Amazon -- a pioneer on the ground floor of something big - in this case the red hot area of social media.

In fact, the stock made headlines when it surged by as much as 50 percent on its first day of trade.

And a 50% surge on Day 1 was the 'tell', according to Fast Money trader Zach Karabell. He says, ”We should have seen this coming."

That's because Groupon followed the trend established by other social media stocks that IPO'd recently. That is, they spiked sharply then experienced massive declines. Take a look:

Company Day 1 YTD
LinkedIn (LNKD) +109% -29%
Zillow (Z) +79% - 36%
Pandora (P) +9% -36%

Therefore, if history is any indication, the decline in Groupin is anything but a buying opportunity.

”I’d steer clear of this one,” counsels trader Josh Brown. "If you have to be in social, look elsewhere.”



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Trader disclosure: On Nov. 23, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Karabell is long APL; Karabell is long MS; Karabell is long IBM; Karabell is long GOOG; Karabell is long ORCL; Karabell is long CAT; Karabell is long JOYG

For Zach Karabell
Rivertwice is short XLF
Rivertwice is short SMH
Rivertwice is long IBM
Rivertwice has long calls HPQ
Rivertwice is long QCOM
Rivertwice is long ORCL
Rivertwice is long DE

For Josh Brown
No disclosures

For James Lebenthal
Lebenthal is long C
Lebenthal is long XLF
Lebenthal is long MPC
Lebenthal is long CAT

For Irwin Simon
No disclosures

For Colin Gillis
BGC Financial LP and/or its affiliates, expect to receive, or intend to seek, compensation for investment banking services within the next three months from all of the companies referenced within this report (AMZN).

BGC Financial LP and/or its affiliates, expect to receive, or intend to seek, compensation for investment banking services within the next three months from all of the companies referenced within this report (AAPL).

For Adam Fleck
No disclosures

For Mike Mayo
No disclosures

For Chris Tevere
No disclosures

For Rich Ilczyszyn
No disclosures



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