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Saturday, September 24, 2011

The Groupon Put-on
Ya gotta wonder sometimes. Groupon, the wonder company that brings you must-have offers like pole-dancing classes and salt treatments, is in danger of imploding its IPO, as reported today in the Wall Street Journal. The fairy tale is a flame out.

Groupon is now restating its last year's revenue - by half. This usually doesn't bode well for an IPO, but their are plenty of suckers out there.

Now to be fair, this is all about revenue recognition.  Groupon books the full value of a deal, and then pays the participating merchant as a cost of sale.  This is normally done in technology business and is perfectly acceptable, except when you are selling shares to the public to value yourself at $20 Billion. The SEC is finally doing  its job.

Just barely a year since it rejected a $5 Billion offer from Google. What were they thinking.  Gordon Gekko was wrong, Greed is stupid.

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