Groupon's group discount on the tech sector

Summary:Groupon CEO and founder Andrew Mason lost his job and has lost more than $1bn since Groupon went public, a fall that's also affected many tech companies.

Groupon CEO Andrew Mason was fired today after more than four and a half years, during which he managed to cash out $30 million and hold more than 46 million shares of the public company, valued at nearly $1.4 billion at its peak.

In January, estimated that his net worth had crashed to about $230 million. Groupon's share price has continued to fall since January.

He is far from poor, and has done very well from Groupon, far better than early shareholders, who have suffered a nearly 90 percent fall in the value of their shares — if they kept them.

Foremski's take

Groupon's fall from grace has affected other tech IPOs, even though it should not have been treated as a tech company. It employs more than 10,000 staff members, mostly in sales, and has no breakthrough technology or services. This is not a characteristic profile for a tech company, which typically has a small workforce and is able to scale up without needing thousands of workers.

Because it is considered a tech company, its problems will continue to weigh down the perception of other tech companies and their valuation in public and private markets, and in their prospects for successful IPOs.

The Groupon effect will continue to discount the value of tech companies well into 2013.

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Topics: Tech Industry


In May 2004, Tom Foremski became the first journalist to leave a major newspaper, the Financial Times, to become a full-time journalist blogger. He writes the popular news blog Silicon Valley Watcher--reporting on the business of Silicon Valley. Tom arrived in San Francisco in 1984, and has covered US technology markets for leading comput... Full Bio

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