Shares in Groupon, the recently listed online coupon seller, plunged more than 10 per cent for the second straight day this week, leaving it hovering just above this month’s initial public offering price.

Groupon fell as much as 15.1 per cent to $20.03 on Tuesday, its lowest price since the stock was sold at $20 on November 4.

By the close, the stock had recovered slightly to stand at $20.07, down 14.9 per cent. That followed a drubbing of 10.1 per cent on Monday and the stock is sharply below its debut price of $28 when it listed earlier this month and shot briefly above $31.

Analysts are worried that Groupon may struggle to achieve profitability given strong competition from LivingSocial and similar products from Google, Facebook and others.

Investors also fear that tech companies that floated small percentages of their shares in initial public offerings, such as Groupon and LinkedIn, now trade at unrealistic valuations due to scarcity that makes it expensive to borrow shares and bet against them.

Groupon soared at its float in part because the company sold only 5.8 per cent of its outstanding shares.

“It went out at a price that was too high and was a very small float. Usually you’re going to see some after-IPO buying, but falling this sharply is a sign of the lack of demand,” said Espen Robak, president at Pluris Valuation Advisors. “The concerns about its business still stand.”

Shares in LinkedIn have tumbled 25 per cent since it announced an 8.7m share secondary offering in early November that was larger than its initial IPO of 7.8m back in May, timed for the end of the mandated six-month lock-up on pre-IPO investors’ shares after a public offering. LinkedIn initially floated just 8.2 per cent of its shares.

“Investors are worried they’re going to do the same thing with Groupon. Everybody is figuring out the game,” said one US tech shares trader.

This week’s pressure on the stock was striking as, under current short selling rules, the company could not be sold short on Tuesday after it dropped 10 per cent on Monday.

Groupon’s slide on Tuesday came as the pressure on other recently listed web companies such as LinkedIn and Yandex eased. Unlike Groupon whose lock up period expires in May 2012, both LinkedIn and Yandex have seen their six month lock up periods expire and both stocks fell sharply during trading on Monday.

Another group whose lock-up expired this week, Yandex, the Russian search engine company, was up 1.7 per cent on Tuesday after falling 8.9 per cent on Monday. It floated 40 per cent of it shares in a May IPO.