By Brian Franchell
Recent highly anticipated IPOs like LinkedIn and Zillow have shown the dire importance of experienced leadership upon the lead up to becoming public. All aspects of the business must be running optimally in order to have the grace of the initial investors and in order to go public with a bang instead of a thump.
The current string of events have set Groupon far below this mark. For one, Groupon’s number two, Margo Georgiadis, has left the company only to go back into the hands of previous employer Google. The fact that she stayed with the company a mere five months says more than enough. This is enough to cast a dark shadow over the company right before its anticipated IPO, but matters have since only gotten worse for Groupon and its youthful CEO Andrew Mason.
The Securities and Exchange Commission has ruled that Groupon can only recognize its commissions as revenue and not the gross value of vouchers as it had been doing up to this date. Thus, Groupon has been forced to restate its financial records- putting investors in an increasingly anxious position. As a result, Groupon’s 2011 reported earnings have shrunken by more than half from 1.52 billion initially to about 688 million now.
In the end, this puts Groupon on a rather weak foundation with investors and an increasingly enfeebled position upon going public. It seems unlikely Groupon would be able to recover its former glory. It looks as if grey skies are ahead for Groupon and its inevitable IPO.