Groupon Puts IPO On Hold 129
With his first accepted submission, quantr tips news that Groupon's IPO plans, which triggered skepticism about its high valuation and furthered claims of a new dot-com bubble, have been put on hold amid regulatory concerns and worries about "market volatility." According to the WSJ, "When the company filed to go public in early June, it attracted criticism for its high marketing costs and unprofitable business. The company was also asked by the Securities and Exchange Commission to remove an unusual accounting metric, dubbed Adjusted Consolidated Segment Operating Income, which painted a more robust picture of its performance. Last week, the SEC also contacted a Groupon attorney over a different matter, said a person familiar with the situation: a leaked internal memo from Groupon Chief Executive Andrew Mason to his staff, in which he touted the company and blasted its critics. Making public statements about the financial status of a company during an IPO process is prohibited by SEC rules."
A Groupon pitfall (Score:4, Interesting)
Too bad for the restaurants in large cities which get sucked into trying Groupon. You place gets filled for one night with cheapskates, who then move on to the next Groupon deal restaurant the following night, and so on... You f'd over regular customers for a bunch of 20-somthing cheapskates - we have not returned and may not.
The whole point of coupons and specials is to get people to try your restaurant and then come back if the person likes it. However with Groupon I doubt very much this works as the only people using Groupon are the types that are eating at the next local Groupon special as all they care about is the deal.
Re:With his first accepted submission... (Score:5, Interesting)
It reminds everybody that it isn't just the same set of contributors, and that it's worth submitting a story. I like it, actually.
Problem is I think they knew they couldn't get it (Score:4, Interesting)
Remember offers like that are contingent. They aren't a "Company A makes offer, Company B says 'I accept' and it is done there, no further discussion." Had Groupon said they were interested, the next step in negotiations would have happened. Specifically, NDAs would be signed and Google would get to go over their assets with a fine tooth comb. They'd see all their financials, what all they have in terms of people, material, IP, and so on, and then decide if they wanted to go through with the deal.
It is the same sort of thing as when you buy a house. When you make an offer and the seller accepts, that is the first step, not the last. There are more things done like an appraisal by the bank, a home inspection, a title search, and so on. If it turns out there's a problem, you don't buy it. That you had said you would was contingent on everything going right.
So my bet is Groupon knew they couldn't survive the scrutiny, and that if Google then backed out, it would be damaging. While Google would likely be NDA bound not to say why, questions would be asked and investors would figure it out, they'd realize that Google had found that Groupon was BSing.
I think they hoped they could pull a fast one on people in IPO. Remember while there's public disclosure it wouldn't necessarily be as intense as Google's examination and more importantly, people wouldn't have to look at anything. If they got caught up in the fervor and bought, well then tough shit for them. It's all on the people who buy the stock to do their due diligence.
That's my bet. They knew that Google wouldn't bite once they knew the full story.