Groupon's IPO in Trouble? (Article)
Groupon the fastest-growing company in history, raised concerns when it filed initial IPO papers with the SEC in June. Much of this concern was based upon the lack of transparency of their accounting practices. The June filing reported an operating income of $60 million in 2010 and a staggering $81 million in just Q1 of 2011.
This week, Groupon amended their filing papers to the SEC to include $345 million in marketing expenses. Now it reports operating losses totaling $420 million for 2010 and $117 million for the first quarter of 2011.
According to a ComputerWorld report today, analysts from PrivCo, a financial research company focused on privately held companies, said the change in Groupon's numbers, along with increased competition in the daily deals market, could put the company's IPO in "serious jeopardy." The report also noted that it's likely the company will delay or withdraw its move to go public.
Zeus Kerravala, an analyst with Yankee Group, said Groupon is in a tough spot but he doubts that the revised filing will derail the company's IPO.
"There's no doubt it will impact their initial valuation," he said. "I doubt it was a tactic, more of an error. It can give the perception they were hiding something, which causes investors to lose confidence."
My Take: The Groupon Bubble is bursting. Aside from bleeding cash, most businesses who use Groupon are not satisfied with the results. The last thing a business wants, in my opinion, is a customer that will only buy your product/service at a significantly reduced price.
Attention Groupon: Next time time someone offers you $6 BILLION, take the money and run to the bank ASAP!
This week, Groupon amended their filing papers to the SEC to include $345 million in marketing expenses. Now it reports operating losses totaling $420 million for 2010 and $117 million for the first quarter of 2011.
According to a ComputerWorld report today, analysts from PrivCo, a financial research company focused on privately held companies, said the change in Groupon's numbers, along with increased competition in the daily deals market, could put the company's IPO in "serious jeopardy." The report also noted that it's likely the company will delay or withdraw its move to go public.
Zeus Kerravala, an analyst with Yankee Group, said Groupon is in a tough spot but he doubts that the revised filing will derail the company's IPO.
"There's no doubt it will impact their initial valuation," he said. "I doubt it was a tactic, more of an error. It can give the perception they were hiding something, which causes investors to lose confidence."
My Take: The Groupon Bubble is bursting. Aside from bleeding cash, most businesses who use Groupon are not satisfied with the results. The last thing a business wants, in my opinion, is a customer that will only buy your product/service at a significantly reduced price.
Attention Groupon: Next time time someone offers you $6 BILLION, take the money and run to the bank ASAP!
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