Lefkofsky is going to have a hard time monetizing that $6.48 billion. The filing has certainly been a real eye opener. The money that the insiders took off the table earlier this year was a huge red flag. Given that it will take at least three months to get SEC approval for the offering, they are going to have to disclose their second quarter numbers before going public. Those results are going to be critical to the valuation
That Queasy Feeling You Get Reading The Groupon S-1 Doesn't Come From One Thing But From Everything
By Pascal-Emmanuel Gobry
Business Insider
Jun. 3, 2011, 12:16 PM
There are many things that feel a bit "off" in Groupon's IPO filing.
But the biggest takeaway from the filing, as our boss Nicholas Carlson put it in our SAIcast yesterday, is that every individual thing on its own is understandable. The problem is that when you add them all together, they paint a picture of a very scary company.
Let's review them:
Groupon is so unprofitable. So was Amazon, and plenty of other companies that ended up being very successful. Plus, like Amazon when it went public, Groupon is growing extremely fast.
Groupon's founders took obscene amounts of money off the table. That's become commonplace these days. The founders of Facebook, Zynga and Twitter all took money off the table. (Though not, to our knowledge, to such extreme extents.)
Groupon is using accounting gimmicks to make itself look better. So did Demand Media. Investors can take the actual GAAP ("Generally Accepted Accounting Principles") numbers and Groupon's own non-GAAP numbers and decide for themselves if they're pertinent.
So for everything that seems weird about Groupon's S-1, you can find a good explanation or a comparison with another company for why it's not really a huge deal.
But that's missing the forest for the trees. While you can have a reasonable explanation for each of these problems in isolation, we don't remember of a company that went public with all of these drawbacks simultaneously. That paints a much different picture.
And, perhaps sadly, when it comes to an IPO, this perception of "hair on the deal" as dealmakers often say, can be as damaging as the truth.
There's no doubt that Groupon is an extraordinary business, in every sense of the term. There's no denying that it has revenue growth that is just outstanding. There's no denying that it has done something perhaps no other company has done, which is go from no employees to 7,000 in a couple of years and not implode. There's no denying that it has streamrolled through insane amounts of competition. There's no denying that its international expansion has been amazing.
But there's also no denying that queasy feeling you get from seeing a company that has all these problems, all at the same time.
Read more: businessinsider.com |
