Archive for November, 2011

The Groupon Roadshow

Tuesday, November 1st, 2011

When Groupon submitted financial reports in July to the Securities and Exchange Commission in advance of its initial public offering, Smeal’s Ed Ketz and his Grumpy Old Accountants co-blogger Anthony Catanach of Villanova noticed that the online coupon seller wasn’t following generally accepted accounting principles. Besides writing about it on their blog, the two professors submitted a tip to the SEC via its whistleblower program. Maybe it was a coincidence, or maybe not, but Groupon issued an amended financial report in September, and now the company has hit the road, taking its IPO case across the country (and online).

But, can the Groupon IPO be saved? That’s precisely the question that Ketz and Catanach answer today on The New York Times‘  blog Dealbook. An excerpt:

When we listen to Andrew Mason, Groupon’s chief executive, sell his powerful model of merchant and consumer value, we are left wondering whether Groupon’s “business model” is really anything more than a half-baked plan. While he makes a compelling argument for how the company delivers customer and merchant value, he is less convincing as to how Groupon will deliver value at an appropriate cost, and actually make money.

For example, Mr. Mason readily admits that low barriers to entry pose a significant challenge to Groupon’s ability to successfully execute its strategy. He acknowledges the thousands of competitors that currently deliver similar products, but calmly dismisses the issue by saying “the proof is in the numbers.” Precisely, and therein lies the problem.

You can find their complete Dealbook blog entry here.

Tags: Accounting, IPO market, Ketz
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