Groupon is one of the fastest growing companies around, but I'm beginning to wonder if it's the MySpace of daily deals. You remember MySpace right? MySpace took social networking mainstream and then Facebook killed it.
There's a similar storyline here with Groupon, which reportedly is pulling back its ambitious IPO plans. Groupon became the de facto daily deal brand. Its coupons are everywhere. Domination plans looked legit. Then Groupon filed its plans to go public. Then we saw some numbers that didn't quite add up. And then the SEC started poking around on revenue figures and a memo from CEO Andrew Mason, who defended Groupon against bad press. Mason noted that Groupon is spending more on marketing than "just about" any company ever.
Toss in a shaky market and it appears that Groupon's IPO is on hold. Market conditions warrant a pullback from an IPO roadshow. After all, who would want to invest in a company that lost $225 million on revenue of $1.52 billion for the six months ended June 30. For the same period in 2010, Groupon lost $27.4 million on revenue of $131.5 million. For 2010, Groupon lost $413.4 million in 2010.
Those figures are jarring in a shaky economy, but the biggest question about the company goes like this: If Groupon were all that and a ball of wax shouldn't something that dominant be able to go public in any market condition?
And there's the rub. Groupon has a lot of questions about its financials and torrid growth. The problem is Groupon doesn't have Rupert Murdoch to swoop in and buy it.
My working theory is that Groupon paves the way, but won't be the big daily deal winner. Living Social seems more relevant. Google already has capital and a user base to compete. Everyone and their mother has a daily deal play. And Visa has all the data to hit you with daily coupons and relevance.
The reality is Groupon could have gone public and flopped with investors. That outcome may just be a sign of what's about to come.
- Mobile wallet wars: Bet on the established financial, billing players
- Facebook kills daily Facebook Deals, keeps Check-in Deals alive
- Groupon traffic drops by half while LivingSocial surges
- Groupon glosses over 'unusual' accounting with SEC
- LivingSocial expands global reach with TicketMonster acquisition
- Google Offers to expand with The Dealmap acquisition
- Google Offers now live in NYC, San Francisco
- Groupon: The IT moving parts behind the growth