Groupon Having an IPO Meltdown

Even when the equities markets are in the bull mode, it's not easy to pull
off an IPO. A CEO needs to spend lots of time wooing investors as well as making
sure the business is running smoothly. It's a tough balancing act. That's
why it is important to have experienced leadership. This certainly has been
critical for recent IPOs like Zillow (NYSE: Z ) and LinkedIn (NYSE: LNKD ). But
when it comes to the Groupon deal, things have been much different. The
company's 29-year-old CEO, Andrew Mason, can't seem to do anything right.
The latest bad stuff came in a Friday filing. First of all, Groupon's No. 2
senior executive, Margo Georgiadis, has left the company to go back to Google
(NASDAQ: GOOG ). She held the post for a mere five months. Interestingly enough,
Mason blogged about the departure, It would have been great if I could say that
we batted 1,000%, but thats rarely the case. (In fact, lately it seems he has
only been able to strike out.) Next, Groupon had to restate its financials. This
is something investors never like to see, especially when it involves major
changes. To this end, the Securities and Exchange Commission has ruled that
Groupon can only recognize its commissions as revenue, not the gross value of a
voucher. The result: For 2011, Groupon posted $688.1 million in revenue, not
$1.52 billion. But wait, there's more: Groupon's filing also addresses
Mason's controversial memo, in which he complained about "insane" media
criticism and said the company is stronger than ever. Such missives can be
violations of the "quiet period," which forbid hyped statements from
companies. What to do? In this case, the SEC has required Groupon to disclose
the memo. And there even is a disclaimer that tells investors to not rely on it!
No doubt, the securities laws can be paradoxical. Perhaps this filing will mark
the end of the drama and maybe Mason will benefit from some hard lessons.
Still, this might not be enough for investors to get comfortable with the deal.
For the most part, Groupon has become the laughingstock of the IPO world. Tom
Taulli is the author of "All About Short Selling" and "All About
Commodities." You can also find him at Twitter account @ttaulli. He does not
own a position in any of the stocks named here.