Groupon Falls as UBS Initiates With Sell Rating: Chicago Mover

Groupon Inc. (GRPN) fell the most in a month after Eric Sheridan, an analyst at UBS AG, said the daily- deals website had an “unproven business model” and initiated coverage with a sell rating.

The stock declined 5.7 percent to $5.62 at 10:49 a.m. in New York, and earlier touched $5.48 for the biggest intraday decrease since Feb. 28. Sheridan set a $4.40 target price.

After the ouster of Andrew Mason as chief executive officer in February, Groupon is searching for a replacement who can help restore credibility and expand beyond Web-based coupons to e- commerce. The Chicago-based company has lost $723.8 million in the past three years.

“We are unsure about the next chapter of the Groupon story,” Sheridan wrote in a research report. “A new CEO is expected to be named over the coming three to six months, further clouding our view of what Groupon might look like a few years from now.”

The company generates revenue by offering discounts -- known as Groupons -- from businesses such as restaurants and nail salons. It then shares the revenue with the businesses.

Groupon Goods, a service started in 2011 to help retail companies such as Dell Inc. (DELL) and Garmin Ltd. (GRMN) peddle thousands of marked-down items via two-day sales, is on track to reach about $2 billion in annual billings, Groupon said in February.

To contact the reporter on this story: Lisa Rapaport in New York at lrapaport1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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