Groupon IPO delayed indefinitely
(CBS) - Daily deals site Groupon, which had planned to go public by the end of September, is postponing a highly anticipated initial public offering (IPO). The company is holding off due to the market downturn and concerns from the Securities and Exchange Commission.
In June, the hot startup, which has more than 83 million subscribers and 57,000 local merchants, announced it planned to raise up to $750 million.
Complete coverage of Groupon on Tech Talk
"Add Groupon Inc. to the list of hot new Web companies having second thoughts about whether now is a good time to go public," says Wall Street Journal. "[It] canceled its investor roadshow and is reevaluating plans for an initial public offering in the face of stock-market vitality, said a person familiar with the matter. While the Chicago company isn't pulling its IPO, it is reassessing its timing on a week by week basis, this person added."
Is Groupon scared now since other web companies, like LinkedIn and Zillow, have had shaky starts and investors are questioning the sustainability of web businesses? But then again, music streaming service Pandora did have success with its IPO.
"Groupon, in particular, has grappled with a series of missteps. When the company filed to go public in early June, it attracted criticism for its high marketing costs and unprofitable business, Wall Street Journal reports. "The company was also asked by the Securities and Exchange Commission to remove an unusual accounting metric, dubbed Adjusted Consolidated Segment Operating Income, which painted a more robust picture of its performance."
There was also that leaked memo from CEO Andrew Mason to the staff that regaled how well the company is doing when he was supposed to stay mum.
"The memo to employees promoted the company's growth and strength against rivals," reports New York Times. "But the memo quickly found its way in the public sphere, raising concerns about whether the company had violated the mandatory 'quiet period' that applies to companies waiting to go public."
Social gaming company Zynga is also holding off on its IPO for similar reasons - "because of poor market conditions and to answer questions from the U.S. Securities and Exchange Commission," reports Reuters.