Groupon has fallen victim to the IPO blues. The stormy IPO market claimed several causalities in August, and now Groupon has canceled its roadshow — when it pitches itself to investors nationwide — originally planned for next week.Expecting to receive a $20 billion valuation, Groupon will asses its position weekly before making any further actions. The decision to delay comes just days after the SEC sent a letter to Groupon CEO Andrew Mason saying he had violated SEC rules against public statements leading up to an IPO.
Mason sent an internal email that praised the company and bashed critics that was later leaked the public. Some speculate that Mason knew the email would be leaked.
Groupon has received a great deal of criticism since filing its S-1. In its SEC papers, it revealed high marketing costs and an unprofitable business model. (Mason has assured investors that the company can turn a profit.) As for the bigger picture, Groupon suffers from a glut of copy-cat companies all offering similar daily coupons. Facebook has already canceled its daily-deals operations, and Yelp axed half its team.
We’re traditionally in a quiet period for IPOs: It’s vacation season. You will more likely find investment bankers on a Hamptons beach than in a Manhattan office. Traditionally, the IPO market reopens in mid-September, but given the market’s recent jitters, investors may not be looking to take the chance on an IPO, which is generally considered to be a riskier investment than company already traded in the exchanges. We may need to wait until early October before companies will chance an IPO, says Scott Sweet, a senior managing partner at IPO Boutique.
Smaller companies may wait to jump back into the stormy financial seas until Groupon and Zynga head in. This means, to open the IPO market up, Groupon needs to get over its blues sooner rather than later, Sweet says.
Read more at The Wall Street Journal.