Groupon's IPO in Trouble? (Article)

[GTS Mark]

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!

[marketsmart]

those fucking idiots...

this shit is dot com days all over again..

companies that will never become profitable going public..




.

[Harmon]

Groupon is a joke. A flash in the pan. Who offered them 6 billion?

[Harmon]

Originally Posted by marketsmart

those fucking idiots...

this shit is dot com days all over again..

companies that will never become profitable going public..
.

I actually hope this is true.

[blackmonsters]

Originally Posted by GTS Mark

$345 million in marketing expenses.

Fucking Choker and his damn traffic prices.





Seriously, how did they manage to spend that much?

[GTS Mark]

Originally Posted by Harmon

Groupon is a joke. A flash in the pan. Who offered them 6 billion?

www.google.com

[GTS Mark]

Originally Posted by blackmonsters

Fucking Choker and his damn traffic prices.





Seriously, how did they manage to spend that much?

Where were you on the internet the last year? They have been spending money like Charlie Sheen in a whore house!

[seeandsee]

they are losing money?!?! no way, they are making bank...

[Harmon]

Originally Posted by GTS Mark

www.google.com

I am baffled as well as speechless they did not take that kind of cash and run for the fucking hills...

[FreeHugeMovies]

You guys are being silly. They will eventually turn a profit, just give them time. Wasn't facebook burning through MILLIONS a month before they turned a profit? The company is still young, give them time.

[marketsmart]

Originally Posted by FreeHugeMovies

You guys are being silly. They will eventually turn a profit, just give them time. Wasn't facebook burning through MILLIONS a month before they turned a profit? The company is still young, give them time.

i believe FB has been caught also inflating their numbers..

and Groupon is not even close to the model of FB..

local companies are now copying Groupon and they are offering better deals in the smaller markets..

Groupon is fucked..

They will never turn a profit unless they cut their advertising spend to zero...





.

[dyna mo]

Originally Posted by GTS Mark

"I doubt it was a tactic, more of an error.

a ~$550 million dollar error? sounds like these accountants are in line for some plush government gigs/

[WiredGuy]

The company has had a tainted history of cashing out the top level of shareholders since day one. Their last rounds of financing they paid out huge amounts to keep previous shareholders happy. Now they're manipulating their numbers for their IPO. Now with their adjusted numbers, its clear they're bleeding cash and desperately need to raise funds yet again. Not to mention tons of competition in the space. They should have sold to Google on their way up the ladder. Stay away!!
WG

[GTS Mark]

Originally Posted by FreeHugeMovies

You guys are being silly. They will eventually turn a profit, just give them time. Wasn't facebook burning through MILLIONS a month before they turned a profit? The company is still young, give them time.

I dunno last year and the beginning of this year they were hot as hot could be. Now there are way more companies in the daily deals vertical (especially facebook, google etc...). Plus tons of start ups that are focusing on the smaller towns and districts that Groupon has been slow to adopt (they are hitting mostly larger cities).

I don't think Groupon is going anywhere but they certainly aren't as hot as they once were.

[JamesGw]

They should have went to Google. I think Google finally has Youtube turning a profit, or at least they thought they would be. I haven't seen any numbers from Q1 or Q2.

[GTS Mark]

Originally Posted by WiredGuy

The company has had a tainted history of cashing out the top level of shareholders since day one. Their last rounds of financing they paid out huge amounts to keep previous shareholders happy.
WG

http://www.dailymail.co.uk/news/arti...oupon-IPO.html

[dyna mo]

Originally Posted by GTS Mark

http://www.dailymail.co.uk/news/arti...oupon-IPO.html

wow, groupon founder only has ~7% ownership. sold outtttttttttttttttt

[cherrylula]

I hate that stupid fucking site. LOL

good deals, but like I need all that shit... GO AWAY GROUPON.

[dyna mo]

The Journal reports Mr Lefkofsky has already cashed out more than $300million of Groupon stock as the company sold shares to outside investors.

[Rodent]

Yea they should have taken that 6B offer. No one(outside of them) knows why they didnt take that money either, they will never see that kind of cold hard cash thrown at them again with all the competition out there now.

[slavdogg]

Originally Posted by WiredGuy

The company has had a tainted history of cashing out the top level of shareholders since day one. Their last rounds of financing they paid out huge amounts to keep previous shareholders happy.
WG

thats normal for all VC funded companies.
Typically Insiders, founders cash out every step of the way with new rounds of funding.

[slavdogg]

Originally Posted by dyna mo

The Journal reports Mr Lefkofsky has already cashed out more than $300million of Groupon stock as the company sold shares to outside investors.

How much did Zukh or Twitter boys cash out ?
In the current round of Twitter funding thats underway, insiders are selling about $400m worth of their own shares.

[marketsmart]

Originally Posted by Rodent

Yea they should have taken that 6B offer. No one(outside of them) knows why they didnt take that money either, they will never see that kind of cold hard cash thrown at them again with all the competition out there now.

you have to wonder if it was because they knew google would do their due dilligence and find out that the numbers were bogus...




.

[dyna mo]

Originally Posted by slavdogg

How much did Zukh or Twitter boys cash out ?
In the current round of Twitter funding thats underway, insiders are selling about $400m worth of their own shares.

i wouldn't be surprised. imo, there should be rules about such things. i've seen it from the inside of a social network prepping for an ipo. for lefosky, i think it's particularly improper, he was an investor not a founder.

[slavdogg]

Originally Posted by dyna mo

i wouldn't be surprised. imo, there should be rules about such things. i've seen it from the inside of a social network prepping for an ipo. for lefosky, i think it's particularly improper, he was an investor not a founder.

really ? so investors should not be allowed to cash out at any step of the way ?

[dyna mo]

Originally Posted by slavdogg

really ? so investors should not be allowed to cash out at any step of the way ?

i think when the #s have yet to be truly accounted and verified there should be rules, yes. just like what is happening here with groupon, if you were a last round investor and you just found out they made an negative accounting *error* to the tune of $550 million over the last 15 months while the original angel cashed out $400 million? fuck yes there should be rules.

[slavdogg]

Originally Posted by dyna mo

i think when the #s have yet to be truly accounted and verified there should be rules, yes. just like what is happening here with groupon, if you were a last round investor and you just found out they made an negative accounting *error* to the tune of $550 million over the last 15 months while the original angel cashed out $400 million? fuck yes there should be rules.

Dyna Moron, so you want rules set and enforced to protect you from yourself ??
who do u expect to set rules to protect you from making private investments ??

[mynameisjim]

This is why Facebook banned American investors in their IPO, then they don't have to be bothered with silly things like "transparency" or declaring any verified numbers.

[dyna mo]

Originally Posted by slavdogg

Dyna Moron, so you want rules set and enforced to protect you from yourself ??
who do u expect to set rules to protect you from making private investments ??

you mad bro, over what dyna mo opines about pre-ipo rules?

[dyna mo]

ftr, when i owned pre-ipo shares in the dot com i worked for when it prepped to go, i was barred from selling them.

[TheSquealer]

Originally Posted by marketsmart

i believe FB has been caught also inflating their numbers..

and Groupon is not even close to the model of FB..

local companies are now copying Groupon and they are offering better deals in the smaller markets..

Groupon is fucked..

They will never turn a profit unless they cut their advertising spend to zero...



.

Groupon rose on the power of their PR. Great PR is never a foundation for a sustainable business model. How well they do in the future with everyone trying to take a piece, down to the smallest local level as you mentioned is definitely uncertain.

Typically, in the normal business world, no company/product can own more than 50% of any given market. Online however, a huge marketshare can evaporate in an afternoon.

Further, FB users are invested in FB. Their pics, their videos, their friends/family, their connections, their groups, their apps etc. FB ads are worth a lot because of the ability to target to the extent that you can. FB has a lot to offer that will hold up over time. Groupon has nothing to offer that 1,000,000 copycats aren't now offering or that can't offer with a 500.00 script/white label and the willingness to go business to business and sell... Groupon takes a huge share of the sales, demands the offer be at least 50% off (i think) etc. Which doesn't even make sense for most businesses unless the business is dying.

[dyna mo]

oh look, i'm not the only one who has an issue with cashing out pre-ipo.

http://www.privateinvestments.com/ar...ock-sales.html

http://www.washingtonpost.com/nation...FGH_story.html

[dyna mo]

oh noes, what a morons

WILL HIGH VALUATIONS AND PRE-IPO EXITS IN THE SECONDARY MARKET AMONG INTERNET DARLINGS LEAD TO THE NEXT BUBBLE?

http://tommytoy.typepad.com/tommy-to...e-is-in-t.html

As you can see from the above information, SecondMarket is doing a lot of business and making a lot of money on trading commissions. However, a larger percentage of individual accredited investors are buying the private stock of internet startups, making you wonder whether insiders and early investors in many of these startups, will leave those individuals (albeit wealthy individuals) holding the bag when the music stops.

The lack of transparency and the outrageous valuations for startups that make nothing should concern every investor.







/

[slavdogg]

FYI you can buy groupon preIPO shares right now

Seller Posts
Post To Sell Shares
Price Shares Type Total Implied
Valuation Posted
Min Max Min Max
$50.00 5,000 - Common $250,000.00 - $14,865,000,000 08/05/11 Details | Ask Specialist | Agree to Buy
$53.00 5,000 10,000 Common $265,000.00 $530,000.00 $15,756,900,000 07/31/11 Details | Ask Specialist | Agree to Buy
$55.00 10,000 15,000 Common $550,000.00 $825,000.00 $16,351,500,000 07/21/11 Details | Ask Specialist | Agree to Buy


fyi, we dont ahve any groupon shares.

[dyna mo]

Why is Groupon not merely a tech-bubble datum but a Ponzi scheme? Simple: Groupon has found that you can get local merchants to try anything once if it brings them new customers.
A few local merchants in Chicago get them started, and Groupon shows good revenues. In fact, Groupon immediately remits half of those ?revenues? back to the local merchant ? they were never Groupon revenues in any meaningful sense of the word.

But, optically, Groupon revenues look high ? which they use to raise a financing round at a high valuation. Then they use the proceeds to hire vast armies of salespeople to dig deeper into Chicago?s local merchant community and repeat the trick in other cities.

Meanwhile, many early-adopting merchants find that the burst in customers immediately disappears, and since they can?t perpetually discount 75%, those merchants stop using Groupon. But Groupon?s sales force adds many more new merchants than it loses (for now). And Groupon goes out and raises another round at an even higher valuation; they hire even more salespeople and expand into even more virgin territory. Lather, rinse, repeat.

[TheSquealer]

Originally Posted by dyna mo

Why is Groupon not merely a tech-bubble datum but a Ponzi scheme? Simple: Groupon has found that you can get local merchants to try anything once if it brings them new customers.
A few local merchants in Chicago get them started, and Groupon shows good revenues. In fact, Groupon immediately remits half of those ?revenues? back to the local merchant ? they were never Groupon revenues in any meaningful sense of the word.

But, optically, Groupon revenues look high ? which they use to raise a financing round at a high valuation. Then they use the proceeds to hire vast armies of salespeople to dig deeper into Chicago?s local merchant community and repeat the trick in other cities.

Meanwhile, many early-adopting merchants find that the burst in customers immediately disappears, and since they can?t perpetually discount 75%, those merchants stop using Groupon. But Groupon?s sales force adds many more new merchants than it loses (for now). And Groupon goes out and raises another round at an even higher valuation; they hire even more salespeople and expand into even more virgin territory. Lather, rinse, repeat.

I think that a lot of this is what people simply do not or refuse to understand. If you have a spa - you normally charge $200.00 for the XYZ Massage Package and want to use Groupon, you have to offer that for $100.00 and then you have to give the lions share of that $100.00 collected to Groupon and it takes months to even get that from them.

In that example, you didn't create customers. Sure, you exposed more people to your super duper massage.. but you lost your ass on it, you flooded yourself with useless appointments AND those are not people with money, people who become repeat customers and people who refer people to you with money. Those were people who only did it because it was a "deal" or because it was given to them as a gift or whatever.

[marcop]

Originally Posted by GTS Mark

My Take: The Groupon Bubble is bursting. Aside from bleeding cash, most businesses who use Groupon are not satisfied with the results.

I have a friend who's the general manager of a large restaurant in my neighborhood. They ran a Groupon special several months ago, and he told me they'd never run one again. It brought in people who didn't eat out often (who the fuck are they?), who didn't tip, and who were rude to the waitstaff. Everyone who worked in the restaurant hated it.

[fuzebox]

Originally Posted by TheSquealer

I think that a lot of this is what people simply do not or refuse to understand. If you have a spa - you normally charge $200.00 for the XYZ Massage Package and want to use Groupon, you have to offer that for $100.00 and then you have to give the lions share of that $100.00 collected to Groupon and it takes months to even get that from them.

In that example, you didn't create customers. Sure, you exposed more people to your super duper massage.. but you lost your ass on it, you flooded yourself with useless appointments AND those are not people with money, people who become repeat customers and people who refer people to you with money. Those were people who only did it because it was a "deal" or because it was given to them as a gift or whatever.

It takes very specific businesses to be able to profit off groupons, most of them upsell aggressively or have a misleading price structure. I've bought groupons in the past where I found out that the "walk-in discount price" was the same as the groupon price.

[Agent 488]

groupthink at it's finest.

[CamChameleon]

Mark, sorry if i missed it in the thread but can i get a link to the article?

[FeelMyTube]

only way they can possiblly fend off competition is if they gain enough scale (number of active users) to ensure better deals than competition.

I think they spread themselves thin to sustain the fastest growth company story and are now in deep trouble...