Someone should get Groupon CEO Andrew Mason a discount to a business-management course. Already taking SEC heat about Groupon‘s IPO filings, Mason’s company apparently over estimated its revenues by nearly $400 million — adding more questions to its viability and clouding its IPO future further. “Their accounting issues were foolish,” says Scott Sweet, senior managing partner at research firm IPO Boutique. “I’ve sent Groupon straight to my junk folder.”In Groupon’s earlier SEC filings, it calculated its revenues by the total worth of all sold coupons, putting the figure at $713.4 million. Wall Street’s reaction? Raised eyebrows. Then Groupon has now refilled the paperwork, estimating revenue closer to $312.9 million: In the new paperwork, it calculated revenue by the total commission from the coupon sales, not the total worth of all coupons.
If only this accounting change had been Groupon’s only shadow cast on its IPO. “The deal has been tainted well before now,” Sweet says. “The deal has lost its luster for many weeks.” On the same day the new revenue figures came out, Groupon announced separately that its COO was leaving after just five months. Earlier this summer, Mason violated the IPO Quiet Period by emailing his employees about media criticism of Groupon, with many speculating he knew the email would leak. And Groupon faces a booming daily deals market full of copy-cat companies. Any one can offer a coupon, and some, like LivingSocial, seem to do it just as well as Groupon.
All this comes at a very poor time for IPOs generally, too. Groupon may have to evaluate whether it wants to, and can, go public. And don’t forget that Groupon also passed up a sweet $6 billion deal from Google. “I can assure that Groupon’s venture-capital backers probably want to choke Andrew Mason for not taking the Google offer,” Sweet says.
The only people benefiting from all of Groupon’s mishaps? “I’m sure Groupon has had to pay its in-house counsel a small fortune,” Sweet says.
Read more at The Wall Street Journal.