Stephen Foley: Groupon pushes on with its premature flotation plan

 

US Outlook: Andrew Mason has put on a suit. His company has slashed its marketing spending to focus on turning a profit. Existing investors, who have already got rich many times, have agreed not to cash in any more at the flotation, after all. And still, the questions remain over whether Groupon is ready to go public.

It is determined to try. The company put out a much fuller prospectus yesterday, saying it planned to sell $480m-$540m of new shares to fund the business in a stock market offering on 4 November that will value the company at up to $11.4bn.

That is a far cry from the $20bn valuation being bandied about just a few months ago, when social media sensations like LinkedIn where making rocket-like debuts and Groupon was the hottest prospect of the autumn flotation season.

The difference between then and now is that we have had a chance to root around amidst the inner workings of the company's finances, and to realise that Groupon is far from proving it has developed a viable business (let alone one worth in the billions of dollars).

The company is not even three years old and it has built a vast worldwide sales infrastructure to sign up customers to receive a daily email and local merchants to use the service to offer money-off deals. Six out of seven of its 143 million subscribers arrived in the past year. Fewer than 30 million of them have purchased a deal. Many merchants find the results from using Groupon as a marketing tool to be underwhelming (or overwhelming). The data on repeat users is too little to model the future, even if there weren't scores of new competitors copying Groupon's idea.

The float process has revealed immaturity in other areas, too. Mr Mason, who only recently celebrated his 30th birthday, fired off an intemperate email to staff complaining about negative coverage of the company and revealing new financial data that should have gone in the prospectus. That document itself has gone through several iterations, as regulators forced Groupon to strip away layers of obfuscating accounting tricks.

Now Mr Mason is back on the round, touting the company's prospects to investors, flanked by executives recruited from Amazon, with the clear message that this company will change local marketing the way Amazon changed retailing. Groupon may already have sparked a revolution. That does not mean it is worth $11.4bn.

PROMOTED VIDEO
News
ebooksNow available in paperback
Arts and Entertainment
Inner sanctum: Tove Jansson and friends in her studio in 1992
booksWhat was the inspiration for Finland's most famous family?
Arts and Entertainment
Singer songwriter Bob Dylan performs on stage
films
Arts and Entertainment
booksPhotographer Richard Young has been snapping celebrities at play for 40 years - but he says it wasn’t all fun and games
News
i100
Arts and Entertainment
Jenna Coleman, Peter Capaldi and Nick Frost star in the Doctor Who Christmas Special, Last Christmas
TV
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Citifocus Ltd: Product Development - Asset Management

£Attractive: Citifocus Ltd: High calibre individual with significant product d...

Citifocus Ltd: Credit Ratings - Banking Sector

£Negotiable: Citifocus Ltd: Leading global bank seeks experienced credit analy...

Citifocus Ltd: Economic Crime Investigation & Analysis

£Attractive Package: Citifocus Ltd: High calibre individual with a high degree...

Citifocus Ltd: Snr Risk Analyst - Capital & Liquidity

£Attractive: Citifocus Ltd: High calibre individual with superior academics an...

Day In a Page

Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?
Nightclubbing with Richard Young: The story behind his latest book of celebrity photographs

24-Hour party person

Photographer Richard Young has been snapping celebrities at play for 40 years. As his latest book is released, he reveals that it wasn’t all fun and games
Michelle Obama's school dinners: America’s children have a message for the First Lady

A taste for rebellion

US children have started an online protest against Michelle Obama’s drive for healthy school meals by posting photos of their lunches
Colouring books for adults: How the French are going crazy for Crayolas

Colouring books for adults

How the French are going crazy for Crayolas
Jack Thorne's play 'Hope': What would you do as a local politician faced with an impossible choice of cuts?

What would you do as a local politician faced with an impossible choice of cuts?

Playwright Jack Thorne's latest work 'Hope' poses the question to audiences
Ed Harcourt on Romeo Beckham and life as a court composer at Burberry

Call me Ed Mozart

Paloma Faith, Lana del Ray... Romeo Beckham. Ed Harcourt has proved that he can write for them all. But it took a personal crisis to turn him from indie star to writer-for-hire
10 best stocking fillers for foodies

Festive treats: 10 best stocking fillers for foodies

From boozy milk to wasabi, give the food-lover in your life some extra-special, unusual treats to wake up to on Christmas morning
'I have an age of attraction that starts as low as four': How do you deal with a paedophile who has never committed a crime?

'I am a paedophile'

Is our approach to sex offenders helping to create more victims?
How bad do you have to be to lose a Home Office contract?

How bad do you have to be to lose a Home Office contract?

Serco given Yarl’s Wood immigration contract despite ‘vast failings’
Green Party on the march in Bristol: From a lost deposit to victory

From a lost deposit to victory

Green Party on the march in Bristol
Putting the grot right into Santa's grotto

Winter blunderlands

Putting the grot into grotto
'It just came to us, why not do it naked?' London's first nude free runner captured in breathtaking images across capital

'It just came to us, why not do it naked?'

London's first nude free runner captured in breathtaking images across capital
In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

Iran is shifting from pariah to possible future policeman of the Gulf

Robert Fisk on our crisis with Iran