SAN FRANCISCO (MarketWatch) — Investors put the cap on what has been a year of controversy and upheaval since Groupon Inc. went public, sending the online daily deal company’s shares down more than 29% Friday following a disappointing quarterly earnings report and forecast.

With its shares plunging to an all-time low close of $2.76, Groupon’s GRPN, -0.53% stock has now given up more than 86% of its value since it went public at $20 a share on Nov. 4, 2011. See: Rex On Techs: Groupon's paper anniversary up in flames.

The impetus for Friday’s selloff was no surprise: Groupon delivered a third-quarter report that included weaker-than-expected sales and a forecast that could potentially miss Wall Street analysts’ estimates in what is historically the busiest period for retailers, due to the Christmas and holiday shopping seasons.

Groupon said it lost nearly $3 million, breaking even on a per-share basis, on revenue of $568.6 million, for the quarter ended Sept. 30, During the same period a year ago, Groupon lost $54.2 million, or 18 cents a share, on $430 million in sales. Read more about Groupon's disappointing earnings report.

Analysts surveyed by FactSet had forecast Groupon would turn in a quarterly loss of 3 cents a share on revenue of $591 million

Scott Devitt, of Morgan Stanley, cut his rating on Groupon’s stock to equal weight, or neutral, from overweight. In a research note, Devitt said he remains upbeat about the company’s long-term position in the local e-commerce market, but, “The path to executing on this vision will take longer than expected.”

Devitt said that Groupon is suffering from what he called “deal fatigue” due to so many companies now offering consumers a multitude of options for online discounts on goods and services. Devitt noted that Groupon’s active customers grew by 45% from a year ago, but the amount of deals actually purchased rose by just 9%.

Another measure of Groupon’s business health turned out to be mixed. Groupon said its gross billings in the quarter totaled $1.22 billion, a 5% increase from a year ago. However, that figure was also down 5.3% from the company’s second quarter results, and international billings recorded a 10% sequential decline.

“The company, and the stock, will likely remain in the “prove to me” camp until trends reverse on a sustainable basis,” said Sterne Agee analyst Arvind Bhatia, in a research note.

Bhatia, who has a neutral rating on Groupon’s stock, said the company’s core daily deal business continued to show sings of deteriorating, and called its international business “particularly discouraging.”

Groupon also gave a mixed outlook for its fourth quarter that did little to allay investors fears about its business prospects. The company said it expects to report revenue in a range of $625 million to $675 million, while analysts had forecast Groupon’s sales for the quarter to reach $635 million.

Macquarie Equity Research analyst Tom White said in a report Friday that Groupon’s forecast reflects the company’s mix of business “shifting towards newer, lower-margin direct revenue businesses as its core local deals business decelerates.” White left his neutral rating on Groupon’s stock unchanged.