The Wall Street Journal, citing a "person familiar with the matter," reports that the SEC's probe into the company is at a "preliminary stage" and the agency hasn't determined whether to move forward with a formal investigation. The SEC probed Groupon twice before the company's IPO on Nov. 4.
The news prompted a nearly 17% drop in Groupon's stock price Monday afternoon to $15.27, well below Groupon's $20 IPO price. However, the stock price rose slightly in after-hours trading.
A Groupon rep could not be reached for comment on the report.
Groupon restated its fourth-quarter earnings last week, cutting Groupon's previous 4Q revenue results by $14.3 million to $492.2 million from $506.5 million. Net income also fell by $22.6 million, or 4 cents a share.
The restatement was apparently driven by higher-than-anticipated refund rates. "The revisions are primarily related to an increase to the company's refund reserve accrual to reflect a shift in the company's fourth quarter deal mix and higher price point offers, which have higher refund rates," reads a statement from the company. Translation: The company had not set aside enough money for refunds to customers.
Groupon, whose accounting has been questioned by the SEC, says it has hired accounting firms Ernst & Young and KPMG to oversee its operations.