Missteps, market chaos weigh on Groupon IPO plans
The daily-deals provider is facing difficult decisions as it tries to get back to the business of going public.
Daily-deals provider Groupon is still unsure about when it will be able to go public, a new report claims.
Citing an anonymous source, The Wall Street Journal says that Groupon's management doesn't know when it should finally offer its shares on the open market, citing concerns with increased government scrutiny and trouble on Wall Street.
Last week, the Securities and Exchange Commission forced Groupon to revise its filing papers after finding that the company mistakenly reported higher revenue than it should have. The daily-deals provider previously reported that it generated $713.4 million in revenue in 2010, but the SEC said that the figure should be $312.9 million.
The difference is attributed to how Groupon reports gross earnings. The company previously showed all revenue generated before it doled out cash to merchants. The revised figure shows only the revenue Groupon netted after paying merchants.
Related stories:
• Groupon files its IPO papers
• Groupon sets new date for IPO, report says
• Groupon slashes reported revenue by half, COO exits after 5 months
That news came on the heels of Groupon's COO, Margo Georgiadis, leaving the company to head back to Google. Georgiadis has become the second Groupon COO to leave this year, exiting after just five months in the position. Former COO Rob Solomon left the company after two months in the job.
Those internal problems could be cause for concern among investors. According to the Journal, some investors are worried that Groupon's estimated IPO valuation of about $20 billion could be too high, since its initial revenue figures were erroneously inflated.
Although that alone might be enough for executives at any company to delay an IPO, Groupon's troubles are compounded by the volatile market. As stocks continue to slide, offering shares now might be a mistake. And Groupon executives, hoping to get the most from their IPO, are finding it harder to justify going public right now, the Journal's sources say.
Groupon filed its IPO papers in June. The company said at the time that it wanted to raise $750 million in the offering. According to reports, Groupon initially planned to go public in September, but due to the aforementioned market volatility, delayed its IPO for October or November. Based on the Journal's report, however, Groupon might not even make that date.
As Groupon questions its IPO plans, the company's chief competitor, LivingSocial, is already balking at the idea of going public now, a report claims. Rather than go public, as expected, LivingSocial might instead decide to raise $200 million on a valuation of $6 billion, Bloomberg reported last week.
Groupon did not immediately respond to CNET's request for comment on its IPO plans.