More pain for Angie’s List, Groupon shares

Stocks in the beleaguered social media sector keep heading down.

Shares of Angie’s List Inc. and Groupon Inc. plunged Tuesday as investors continued their retreat from the formerly red-hot sector.

Angie’s List, the consumer-review website, fell sharply as a ban on insider sales expired and major shareholders rushed for the exits. Groupon shares sank as revenue growth failed to meet expectations.

It’s not that the fundamentals have been all that bad: Groupon’s second-quarter revenue, for example, rose 45%. But investor sentiment has turned against the sector as investors acknowledge that reality isn’t living up to overinflated expectations.

Angie’s List tumbled $2.12, or 16%, to $11.17. The shares sank below $13, the price of the company’s initial public offering in November.

The shares were done in by the expiration of so-called lockup agreements, which prohibit certain employees and shareholders from unloading their holdings immediately after an IPO.

Lockups are intended to prevent an exodus that can depress a newly issued stock. The goal is to bring out insider shares slowly to prevent excessive damage to a stock. But investors wanted out now.

Trading was heavy, with 3.5 million shares trading hands, nearly 10 times daily average volume.

The drubbing of Angie’s List may be causing jitters among Facebook Inc. shareholders.

About 1.7 billion Facebook shares will be unleashed on the market in the next few months as a series of lockup agreements expire at that company, a huge supply of overhang that could weigh heavily on Facebook’s already-beaten-up stock.

Groupon’s stock shriveled to another new low after the coupon website’s second-quarter earnings report Monday. Its shares slumped $2.04, or 27%, to $5.51 on record trading volume.

walter.hamilton @latimes.com