A Groupon Inc. investor is suing the company, claiming it misled its shareholders about its finances and hid internal weaknesses.
This past November, Groupon, the world’s largest coupon website, became one of the largest Internet IPOs of the past decade. At the time, the company was valued at more than $10 billion.
But things haven’t been so rosy since Groupon went public. A few days ago, the company revised its Q4 2011 financial results to reflect a larger net loss. It also revealed that it had a “material weakness” in its internal controls because it didn’t set aside enough money for customer refunds.
The announcement upset Fan Zhang, a Groupon investor who paid $61,800 for 3,000 shares in February, and sold them a month later at a loss of more than $9,000. Yesterday, Zhang sued Groupon for overstating its revenue, issuing false and misleading financial statements, hiding internal weaknesses and deceiving investors about how quickly the company was growing.
The suit seeks class action status on behalf of shareholders who acquired Groupon shares between Nov. 4, 2011, and March 30.
Zhang’s lawsuit comes just a few days after Groupon announced that it would pay $8.5 million to resolve a group of lawsuits in which consumers claimed the expiration dates on the company’s coupons violated state and federal consumer protection laws.
The settlement, which a district judge still must approve, would allow consumers who purchased Groupon coupons between November 2008 and Dec. 1, 2011, to redeem the coupons past their expiration dates, or recover from the settlement fund.