The hits keep on coming for Groupon, as it now faces a shareholder lawsuit on top of another day of falling stocks, all over its materially weak accounting.
Groupon shares dropped another few per cent in New York trading yesterday and now sit at their lowest point ever: $15.02.
The stocks have been losing ground since the company had to restate its fourth quarter results at the end of last week due to something of an overstatement of its revenues and an understatement of its losses.
Rather foolishly, the daily deals site forgot that if it offered higher-priced deals, it should really keep back enough money to cover any possible refunds, which pushed its losses higher.
The Securities and Exchange Commission is already probing the incident, since the regulator is none too pleased with newly public companies messing up their accounts, and now a shareholder has launched a lawsuit over the snafu.
Investor Fan Zhang started the class action lawsuit for himself and others, alleging that Groupon's dodgy accounting practices had tricked investors into buying stocks.
"Defendants failed to disclose negative trends in Groupon’s business and made false statements as to Groupon’s financial results," Zhang's court filing read.
"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… reaching a high of $26.19 per share on November 18, 2011."
The shareholder is looking for damages, interest, lawyer fees and anything else the court might award him and his fellow investors.
The Reg has contacted Groupon, which said it had no comment to make on the matter. ®