Waiting In The Wings - Come On Groupon
Since Groupon has divulged the intent to float its shares in public, shareholders have been waiting in the wings to grab the stocks in the pioneer group buying service provider.
Online, November 2, 2011 (Newswire.com) - What occurred in reality was in contrast to the general expectation since the plan was rolled back because of the alleged misreporting of financials by the industry's goliath.
Overnight up and down of valuation has certainly shocked the investors who didn't anticipate this kind of volatility in figures.
It was widely reported that market was ready to welcome one billion dollar stocks with Chicago's deal a day site putting the valuation count at an enormous $20 billion.
Of late, Wall Street Journal reported the company would divest $621 million worth of its shares for a valuation of $10 billion. The report also cited JP Morgan's email as noting total share value would be around $510 million.
People are asking why the group buying pioneer having once clinched the title of the fastest growing company from Forbes, is desperate to seek money from the public through initial public offering (IPO).
Is this because of financial hardship the company may be reeling under? Certainly not. No one is stupid enough to bet on a weak contestant. Financial results should be attractive to goad the small and large lots.
In fact, seemingly it is a constant decline in revenue and coupons that has been stopping the daily deal site from venturing its credibility to capital market for almost a year.
The sign is neither healthy at present. July-September has seen paltry 10 per cent growth in revenue as compared to 33 per cent the second quarter (Apr-June) and 72 per cent in Jan-Mar 2011, according to a Yipit's chart. Similarly, numbers of coupons sold in the third quarter witnessed meager one per cent increase in contrast to 16 per cent and substantial 73 per cent in second and first quarters respectively.
A big WHY must have haunted the market players. Yipit attributes the drooping figures to parsimonious attitude of Groupon in terms of spends on marketing as well as mushrooming competitors in the daily deal industry.
As far as marketing spends are concerned, the daily deal company has been criticized for its bloated allocations on hooking the subscribers. Though the site enjoyed 23 per cent expansion in subscriber base in Q3, yet the percentage increase was 16 per cent lower than that in the preceding three months.
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