Who Offed Groupon?

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I offered up three reasons to steer clear of Groupon's IPO last month. Now Groupon itself is proposing a fourth reason: It may not be coming your way.

The daily deals website is canceling its investor road show, delaying its IPO that could have valued the company at a cool $20 billion.

There are plenty of reasons that the wheels appear to be coming off at Groupon, and it's not just the SEC questioning some of its accounting. Groupon was always a company that looked great until it cracked open the hood.

Once investors got a peek at the financials, the growth was there in strides, but not the profitability.

Groupon may have cleared more than $1.5 billion worth of vouchers through the first six months of this year, but the operating loss of $219.7 million during that time is problematic. Frenetic expansion comes at a price, but even gross profit margins are starting to slip.

Anyone combing the Groupon prospectus also came to the realization that flash sales are more of a spectator sport. Just 23.1 million of Groupon's 115.7 million subscribers have actually bought a voucher.

There were also plenty of signs in recent weeks outside of Groupon. Yelp and Facebook are scaling back from their Groupon-like services.  Public companies that soared after hopping on the daily deal bandwagon last year -- travel deals publisher Travelzoo (Nasdaq: TZOO  ) and restaurant reservations hub OpenTable (Nasdaq: OPEN  ) -- have seen their stocks shed more than half of their peak values.

There are certainly plenty of companies still moving forward. (Nasdaq: AMZN  ) continues to stand behind its chunky investments in LivingSocial. Google (Nasdaq: GOOG  ) is raising the stakes on its Google Offers platform; it promoted a deal on its sparsely populated homepage last week.

The past few weeks have been cruel to the handful of companies that have braved the chilly waters in going through with their IPOs, but is that really enough to turn off Groupon?  It shouldn't be. The dot-com darlings are holding up well. LinkedIn (NYSE: LNKD  ) , Zillow (Nasdaq: Z  ) , and HomeAway (Nasdaq: AWAY  ) continue to trade for well more than their IPO prices after going public earlier this year.

Unless Groupon feels that it's about to deliver a monster quarter or two that improves on its troublesome metrics, waiting will only make more people realize why Groupon was never worth $20 billion in the first place. 

Would you buy into the Groupon IPO if it materializes? Share your thoughts in the comments box below.

The Motley Fool owns shares of Google. Motley Fool newsletter services have recommended buying shares of OpenTable, HomeAway,, Google, and Travelzoo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Travelzoo. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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