With the latest news about Groupon's
Since its IPO last November, Groupon has been on shaky ground. Its stock has fallen in the past three months. Then there's the fuzzy math issue. Before their initial offering, Groupon and its underwriters seemed to be having problems figuring out the value of the company, and numbers were bandied about in the $30 billion range, until everyone actually looked at the earnings numbers and revised it down to around $10 billion.
Deal-making business is not for sissies
While starting a daily deal site is easy, keeping one up and running is not. Nearly 800 went out of business last year, and the survivors don't seem to be raking in the dough: LivingSocial lost nearly $560 million last year, probably thanking its lucky stars that it has Amazon
Although Groupon lost $257 million last year, it continues on with expansion plans. As noted by accounting professors Anthony Catanach and J. Edward Ketz, Groupon has made 17 acquisitions in the past year or so, as well as experienced meteoric growth -- such as widening its merchant group to nearly 80,000 from a little over 200 just a couple of years ago. How did it finance all this? It certainly makes me wonder.
This latest restatement of earnings was a biggie in a few ways. Not only did the company have to admit that it made a huge accounting boo-boo, particularly after the initial valuation circus, but it also had to admit that customers of Groupon are demanding more of their money back. Not only that, but the company is now being investigated for possible violations of securities laws by releasing those buggy financial numbers. Well, at least the numbers seem right this time: $65 million quarterly loss times four equals a $260 million loss for this year, if the pattern continues. Pretty close to last year's loss, isn't it?
What's in store for Groupon?
Will we all wake up one morning to find out that Groupon disappeared in a puff of smoke? It's not an easy business and there's tons of competition, but something is just not right here. When it comes to smoke and mirrors, Groupon's got you covered.
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