Groupon Isn’t Worth What You All Thought It Was. [I TOLD YOU SO]

Posted: September 26, 2011 in News
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Funny how back in June i made the statement that Groupon wasn’t worth what it went for in its IPO because the company itself has serious profitability issues. Check here –> Groupon’s Hug IPO May All Have Been For Nothing. or here –> I Stand By My Statement That Groupon Will Be Dead In The Water. [Competition] .  Now almost 4 months later that numbers are making my predictions the TRUTH. Sell Groupon before it is too late.

Groupon’s revenue measure shrinks more than 50 percent

Donald B. Marron is director of the Urban-Brookings Tax Policy Center and a visiting professor at the Georgetown Public Policy Institute. He previously served as a member of the President’s Council of Economic Advisers and as acting director of the Congressional Budget Office.

The company revised its financial results Friday, and the revenue picture looks less explosive. In the latest update of its S-1 registration statement, Groupon reported $393 million in Q2 revenues. That’s a remarkable figure for such a young company but a far cry from the $878 million it previously reported.

About a month ago, I remarked on Groupon’s explosive revenue growth (and its equally impressive cost growth).

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And what happened to the almost $400 million in missing revenue? That money–payments to the merchants who provide goods and services for Groupons–is now subtracted before reporting revenue rather than deducted after as an expense. In short, Groupon went from a gross measure of revenue to anet one.

The bad news for Groupon is that the new presentation makes the company appear less than half as big as it did previously. The good news, I suppose, is that its expenses went down by the same amount.

Groupon’s effort to go public has been one of the bumpier ones in recent memory. Its first filing emphasized a profit measure, essentially profits less marketing expenses, that was widely ridiculed. That got dropped in the second draft. And now a gigantic restatement of revenue in the third draft. Not to mention, the company’s recent difficulties with the SEC’s quiet period requirements.

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