website Groupon has decided to delay its IPO for a few weeks due to questioning
regarding the public float from regulators as well as the dismal outlook of
developed economies' stock markets.
Groupon filed for a $750 million IPO in June, and was set to launch the
final phase of its initial public offering in mid to late September. To make
this deadline, Groupon would have had to offer a roadshow to attract potential
investors within the next week or two, but the company called off its roadshow
that was scheduled for next week.
Groupon is not cancelling the IPO, but is putting it on hold for the time being for a few reasons according
The daily deals company recently attracted attention from the U.S. Securities and
Exchange Commission (SEC) when Groupon Chief Executive Andrew Mason released an
internal memo to employees in August that "lashed out" at the
company's critics was leaked to the media. The memo also discussed August
revenue growth and Mason's confidence in the company's business. This was a
problem because regulations limit what a company can say before a planned IPO. This
has prompted questioning from SEC.
Groupon has other troubles on its hands as well, such as investor's
worries about profitability of Groupon's business. The company is growing
quickly, but also losing a lot of money. Its losses are greatly attributed to
spending on new subscribers, but at the same time, Groupon may have to keep up
its significant spending in order to attract new customers and keep the old.
Mason responded to these worries by saying that new subscriber costs
would decline over time because customers, once signed on, can easily be
maintained through email alerts. Groupon also hopes to cut that cost to zero in
less than three years, according to unidentified sources who have asked to be
kept anonymous because the talks are private.
While Groupon intends to keep trucking along, other daily deals ventures
have quit the business, attributing to the slow growth of daily deals in North
America. For instance, Facebook quit its Deals service after a short four months of business.