The quirky online daily deals site, whose creative brand personality still differentiates, has now scaled back the size of its IPO, announced on June 2, 2011.
A Reuters news report says the company is seeking to raise at least $500 million but less than the $750 million it indicated in its first filing. The revised amount would represent less than 10 percent of outstanding shares.
Some sources attribute the reported change to the current volatile investing environment. Others point to investor concerns:
- Groupon cut its earlier-stated revenue in half to respond to questions from the Securities and Exchange Commission about accounting that included operating income but excluded certain major expenses.
- Its chief operating officer departed.
- In a business with low barriers to entry, many competitors, including Internet powerhouse Amazon, have joined the online coupon space.
- Public relations gaffes led to the resignation of the company’s PR chief after just two months, leading communications professionals to guess that his counsel was ignored.
- Growth has slowed, cutting Groupon’s valuation to an estimated $10 billion.
Even back in June, analysts questioned Groupon’s reported $20 billion-and-higher valuation because the company was not yet profitable, with a heavy investment in marketing to build a subscriber base. Groupon spent $263.2 million on advertising and sales emails in 2010, up from $4.5 million the previous year.
“As with any business in a 30-month-old industry, the path to success will have twists and turns, moments of brilliance and other moments of sheer stupidity,” wrote CEO Andrew Mason in a June letter to investors. “Knowing that this will at times be a bumpy ride, we thank you for considering joining us.”
What do you think of Groupon’s reportedly changed IPO?
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