Groupon’s IPO: Short-lived success?
24th November 1 Comment
It has been quite a tumultuous couple of weeks for Groupon, the whiz kid of all voucher and discount sites. After having rejected a considerable 6 billion offer by Google this year, Groupon’s Andrew Mason has steered his ship through the murky waters of pre-IPO economics. After their internal accounting methods had to be changed prior to the filing, the numbers revealed that by the end of Q2 of 2011 Groupon had liabilities of more than $300 million. This was mostly due to the fact that the company invested very heavily into acquiring new customers. (We have talked about Groupon’s business model in more detail before.) Despite those various mishaps, Groupon has managed to sell a 5% share of their company to the public, earning a whopping $700 million and setting the company’s value at about $13 billon.
These days, as the NY Times writes (As Investors Flee Groupon, Outlook for I.P.O.’s Darkens), the share price fell below the initial offering of $20:
For the first time since it went public earlier this month, Groupon broke below its offering price of $20 per share. Shares of Groupon fell 16 percent on Wednesday to close at $16.96.
The popular daily deals site had wrestled with intense scrutiny and volatile equity markets in the weeks leading up to its offering, but its debut was widely heralded as a strong performance. On its first day of trading, Groupon rose as much as 50 percent, before settling at $26.11 per share.
With regard to the volatility of the international stock markets it seems brazen to already deduce the company’s decline from those numbers. Yet, as we have pointed out before, it remains to be seen whether Groupon can become a sustainable and profitable business without the enormous marketing spendings that have been published.