The Groupon Roadshow

November 1st, 2011 - 19 Comments

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.

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This entry was posted on Tuesday, November 1st, 2011 at 3:49 pm and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

19 Responses to “The Groupon Roadshow”

  1. David Case says:

    Groupon’s IPO is contrived. It’s intended to give a first-day jump in price because of the small float. Investors are smart, though, and the realize these financial tricks. They looked at Groupon”s S-1 and saw that Groupon’s model is unprofitable, Groupon’s growth is declining quarter after quarter, and Groupon’s new products are not generating additional revenue.

    Groupon’s insiders took hundreds of millions of dollars out of the company during its VC rounds, all while Groupon remained unprofitable. Why should investors give Groupon more money to lose?

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  12. Everyone knew that Groupon’s major success was due to their not standard business model, what was the actual reason for them to become a multi million company. I do not know if their account’s IPO is contrived or no, but I do not think that they are in decline. Withtheir tricks and techniques for attracting customers, I believe that they will keep leading place on the markets.

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  14. Classic ‘cover my tracks’ by Groupon, surprised I didn’t hear about this one. Certainly bigger fish to fry of course:)

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