SAN FRANCISCO - Online discount deals firm Groupon saw its fledgling stock price sink Monday as word spread that it overstated its quarterly earnings, a move reportedly being scrutinized by US regulators.
Groupon's stock price sank nearly 17 percent throughout the day, gaining back a little ground to $15.35 in after-hours trading that followed the close of the NASDAQ in New York City.
Groupon made its stock market debut at $20 per share in November and peaked above $31 dollars a share.
The loss of investor faith in Groupon came after the Chicago-based firm late Friday revealed that it had overstated earnings in its first quarterly financial report, blaming accounting mistakes.
Groupon said it had underestimated operational costs and money needed to pay refunds for more expensive deals, which buyers are more likely to return.
Groupon lowered its revenue for the final three months of last year by $14.3 million and its net income by $22.6 million.
The adjustment pushed Groupon's loss for the quarter to about $65 million and prompted investors to reconsider whether the company has a winning business model.
The Securities and Exchange Commission is looking into the earnings report revision, according to a report in the Wall Street Journal that cited an unnamed source.
Groupon in February issued its first earnings report as a publicly traded company, saying it failed to turn a profit despite revenue nearly tripling from a year earlier.
Groupon shares were listed on the NASDAQ on November 4 in a blockbuster public offering that raised a whopping $700 million and triggered fears that investors may be foolishly overvaluing hot Internet startups.
Groupon, which rejected a $6 billion takeover offer from Google a year ago, has enjoyed phenomenal growth since its founding in 2008 but has been dogged by questions about its business model and accounting methods.
© 1994-2012 Agence France-Presse