Groupon restates its numbers, IPO timing hazy

Groupon still wants to have its IPO, but the road to get there continues to be rough – well, more like a rollercoaster. Last week the company restated its revenues to a fraction of previous claims and chief operating officer Margo Georgiadis, who had left Google five months before to join the start-up, returned to the search giant. 

The timing of the IPO is up in the air because the SEC has been going through the company’s filings like it didn’t have anything else to do. But questions about Groupon’s accounting standards and the information it has presented to the markets have been thorny from the start.

Groupon got a lot of attention just over a year ago when Google bid $6 bn for it. The board and investors turned down the offer because they thought they could do better with an IPO. At the time, the company was telling the press it had become profitable within eight months of going into business.

In June Groupon filed its S1 for a $750 mn IPO and revealed that it had lost $413 mn last year. In fact, the company had been swimming through red ink for several years. It also received a lot of criticism for creating financial metrics that seemed to overstate Groupon’s performance. Also in June chairman Eric Lefkofsky said the business would become ‘wildly profitable‘.

Groupon filed an amended S1 in July that de-emphasised some of the accounting madness. It also stepped back from Lefkofsky’s claim. Some investors were becoming suspicious of the information they saw and what the company didn’t report. There was also growing SEC scrutiny as the agency kept sending more questions to Groupon about the filing.

In August came another amended S1, this time with another quarter of financial data and more changes. But later that month came a different document: a memo from CEO Andrew Mason that attacked the criticism the company was getting and made more pronouncements about the future. Somehow, the memo leaked to the press. Fancy that.

And so there was talk of delaying the IPO because the SEC had questions about the memo. Finally, another amended S1 was filed to restate revenue because of SEC pressure. Maybe it would be easier all around for Groupon to move its headquarters to the SEC’s offices.

[Article by Erik Sherman, Inside Investor Relations]

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