Groupon Inc (GRPN.O) shares dropped 7 percent on Monday on concern about merchant demand for the company's daily deals.
Raymond James analysts, led by Aaron Kessler, released a survey of more than 100 Groupon merchants on Monday showing these key partners have mixed feelings about working with the company.
The survey found that 16 percent of merchants were "very satisfied" with running a Groupon promotion and 37 percent were "satisfied."
However, a third were either "unsatisfied" or "very unsatisfied," while 39 percent of Groupon merchants are not likely to run another Groupon deal over the next couple of years, Kessler wrote in a note to investors.
Groupon shares have lost about three-quarters of their value since the world's largest daily deal company went public last year. Accounting problems have plagued the company, while some investors and analysts worry that demand for daily deals is waning.
"After astronomical growth in 2012, the online deals marketplace is showing signs of maturity," said Peter Krasilovsky, vice president and program director, BIA/Kelsey, which tracks local advertising and commerce. "There has been consolidation in the space, deal conversion rates may be suffering due to over-familiarity and the market may be near saturation."
Groupon shares were down 7 percent at $4.90 on Monday afternoon on the Nasdaq.
Evercore Partners analyst Ken Sena put Groupon on the firm's "conviction sell" list on Monday.
Groupon may have to spend more on marketing, given "daily deal fatigue," Sena said. The analyst has a $3 price target and an "underweight" rating on the stock.
(Reporting by Alistair Barr in San Francisco; editing by Matthew Lewis)