Groupon shares plummet as investors tire of daily deals

ONLINE deals site Groupon lost more than a fifth of its market value last night after admitting it was having to cut margins in order to keep businesses using its service.

The company partners with merchants to sell discount products and services for a limited period, allowing firms to attract new customers or offload excess supply. Groupon then takes a cut.

However yesterday it admitted that it was having to share more money with merchants in order to convince them to run more deals.

Fourth-quarter net losses widened to $81m (£53m) from $60m, despite revenues growing to $638.3m from $492.2m.

Groupon shares fell 22 per cent to $4.65 in after hours trading. This is in sharp contrast to its opening day trading in November 2011 when shares briefly hit $26.