Groupon Files $750 Million IPO

Tyler Durden's picture

Here is the key data from the Morgan Stanley (lead Underwriter), Goldman Sachs and Credit Suisse-led IPO:

  • Q1 Revenue: $644 million, up from $44 million a year prior
  • Q1 Gross Profit: $270 million, 41.9% margin, up from $20 million a year prior, and down from the margin of 45.5%
  • Q1 Loss from operations: ($117) million compared to $8.5 million profit a year earlier.
  • Q1 subscribers: 83.1 million, up from 3.4 million
  • Q1 cash flow: $6.978 million down from $12.0 million a year earlier
  • Cumulative customers: 15.8 million, up from 874K
  • Featured merchants 56.781 up from 2,903
  • Groupons sold: 28 million compared to 1.76 million
  • Cash balance: $208.7 million; Working capital deficit: ($228.7) million
  • Total Assets: $541.4 million, Total Liabilities: $14.8 million
  • Total shares outstanding: 296,140,145
  • 37.2% of GRPN sales came from outside of the US in 2010
  • Since inception GRPN has raised $1.1 billion from sales of common and preferred stock
  • The company had 7,107 employees at March 31, up from 37 on June 30, 2009
  • Andrew Mason's annual base salary is $575 as of January 1, 2011
  • The firm's former President and COO Robert Solomon, left the company on March 22, 2011, its former CTO Kenneth Pelletier, left GRPN on March 23, 2011.
  • Curiously, the company raised it raised $135 million at $32.12/share in its Series E round in April 2010, while in a subsequent Series G private round in December 2010, it raised $946 million, at $31.59 per share. Downround?

Use of Proceeds: "We intend to use the net proceeds to us from this offering for working capital and other general corporate purposes, which may include the acquisition of other businesses, products or technologies; however, we do not have any commitments for any acquisitions at this time. We will have broad discretion in the way we use the net proceeds. Pending use of the net proceeds as described above, we intend to invest the net proceeds in money market funds and investment grade debt securities. "

GRPN believes with the cash from the IPO, it should have enough money to last it 12 months: "Although we can provide no assurances, we believe that the net proceeds from this offering, together with our available cash and cash equivalents balance and cash generated from operations, should be sufficient to meet our working capital requirements and other capital expenditures for the next twelve months."

An amusing risk factor:

If securities analysts do not
publish research or if securities analysts or other third parties
publish inaccurate or unfavorable research about us, the price of our
Class A common stock could decline.

The trading market
for our Class A common stock will rely in part on the research and
reports that securities analysts and other third parties choose to
publish about us. We do not control these analysts or other third
parties. The price of our Class A common stock could decline if one or
more securities analysts downgrade our Class A common stock or if one or
more securities analysts or other third parties publish inaccurate or
unfavorable research about us or cease publishing reports about us.

And from the Legal Procedings:

The Company currently is involved in several disputes or regulatory inquiries, including suits by its customers (individually or as class actions) alleging, among other things, violation of the Credit Card Accountability, Responsibility and Disclosure Act and state laws governing gift cards, stored value cards and coupons, violations of unclaimed and abandoned property laws and violations of privacy laws. The number of these disputes and inquiries is increasing. Any claims or regulatory actions against the Company, whether meritorious or not, could be time consuming, result in costly litigation, damage awards, injunctive relief or increased costs of doing business through adverse judgment or settlement, require the Company to change its business practices in expensive ways, require significant amounts of management time, result in the diversion of significant operational resources or otherwise harm the Company's business.

In addition, third parties have from time to time claimed, and others may claim in the future, that the Company has infringed their intellectual property rights. The Company is subject to intellectual property disputes, and expects that it will increasingly be subject to intellectual property infringement claims as its services expand in scope and complexity. The Company has in the past been forced to litigate such claims. The Company may also become more vulnerable to third-party claims as laws such as the Digital Millennium Copyright Act are interpreted by the courts, and as the Company becomes subject to laws in jurisdictions where the underlying laws with respect to the potential liability of online intermediaries are either unclear or less favorable. The Company believes that additional lawsuits alleging that it has violated patent, copyright or trademark laws will be filed against it. Intellectual property claims, whether meritorious or not, are time consuming and costly to resolve, could require expensive changes in the Company's methods of doing business, or could require it to enter into costly royalty or licensing agreements.

From time to time, the Company may become party to additional litigation incident to the ordinary course of business. The Company assesses the likelihood of any adverse judgments or outcomes with respect to these matters and determines loss contingency assessments on a gross basis after assessing the probability of incurrence of a loss and whether a loss is reasonably estimable. In addition, the Company considers other relevant factors that could impact its ability to reasonably estimate a loss. A determination of the amount of reserves required, if any, for these contingencies is made after analyzing each matter. The Company's reserves may change in the future due to new developments or changes in strategy in handling these matters. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these matters will not have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

Full filing can be found here.


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firstdivision's picture

What is the Groupon deal if I get 4 people to buy shares?

What does it all mean's picture

Well, just like the ipo, it will pop for the instutional guys and then settle lower.

Just like the deals they have.... all marked higher and the promised a 50% reduction... There is no one that would buy anything without a coupon for a repeat business.

This is definitely the beginning of a bubble.  Why don't we learn anything from Dot Com days.  There is no competitive advantage here, Rue La La, Living Social, Gilt...

It might take 2-3 months to sort out this party, but damn, it will make 2008 and 2001 looks like a party...  

Now is the time to figure out how to short/borrow/synthetically short these guys...  Even at 120% borrow rate for LNKD, shorting it was the right call.

Cursive's picture


LOL. Sums it up. I mean a fucking fly by night glorified green stamps operation.

andybev01's picture

"Green Stamps"...your age is showing.


But then again, so is mine.

What does it all mean's picture

They pulled the trigger the day after the biggest loss since Aug. 2010.  Just like a stop loss order, they don't want to miss the window when the S&P goes sub 1,000 or 800.. 

Seriously, at one point, YHOO is unbeatable... now, they allow you to login to their email using google accounts and/or Facebook... WTF...

UGrev's picture

wtf is "Groupon" ? 

never heard of it until today, ironically, on Linked In.. lol 

TruthInSunshine's picture

It's a lame ass, money losing (Tyler, I read GO lost 400 million last year) turd  of another 'hot' stock that is coming out just in time for a prelude to a mortal wound just like in 2000, when traders believed in Unicorns and Magic Pixie Dust with anything being pumped by the shysters.

Yes, sir, a bag full of LNKD, Group On, and some Chinese RINO and solar companies, and one will be set for life, living on the corner of Easy Street and Good Times Avenue, well into their retirement!


Manthong's picture

Dipweeds should've taken the $6B buyout from Google.

What does it all mean's picture

That was pure hype from the IBers, never confirmed.  More like a 600M or 60M buy out.  Bear in mind, they were NEVER profitable.  Low barrier of entry.  And lack a repeatable business model.  

It's fine to buy a 50% coupon from them... but then again, I can do that from any one of its competitors... and I would never visit any of the businesses, without the subsidy.  (Just like the govt housing purchase tax breaks earlier this year...  only accelerate the demand curve forward, not generating new demand... )  Remember Kozmo?  Cyberrebate?  I can go on and on and on... 


We would never learn.

Manthong's picture

Yep, not much of a unique selling proposition.

In the hype though, they claimed high seven figure revenue. Also about a billion in venture capital in. I, for the life of me couldn't figure out how they could swing all that. Like their long term business prospects, all smoke I guess.

What does it all mean's picture

Their revenue goes out the window as fast as they come in.  Thus net negative.

The real question is:  Why are the investment banks allow to decide who to "go public"?  Isn't that the exact definiton of oligopoly?  The entire capital raising process is flawed, it is all a casino...  

The Cabal decides on who to make rich.  Google instead of Altavista, Groupon instead of Rue La La, Facebook instead of MySpace.  EVERYTHING is rigged.

Here is where I applaud Craiglist...

NotApplicable's picture

The IRS will take care of Craigslist, and those 'evil black markets.' Just you wait and see.

dark pools of soros's picture

how will they fight bitcoins??  will be interesting

magpie's picture

No, Facebook will be the top.
But by then, you'll gladly buy EU and China Sovbonds anyway.

qussl3's picture

facebook is everywhere, pervasive like google.

It demands huge attention from a good chunk of its user.

Groupon is a fucking clown party discount service.

Cleanclog's picture

Agree.  I would buy Facebook, depending on terms, but Groupon - no way!  Ditto for Ruelala and Jewelmint and the rest of these easy to copy yet quick to have margins knocked down quite quickly.  FB more difficult to recreate.  A huge community exists there with real driving power.  Tumblr not so much, but still better than Groupon, Linkedin, Ruelala etc.

Robot Traders Mom's picture

I'm actually getting kind of excited for the ponzi scheme that is our financial system, to end...

Although you can never tell when it will end, this all but confirms it.

shushup's picture

It's crap - wouldn't touch it. Not would I even look for their groupons.

Cleanclog's picture

In San Francisco Bay Area, the daily Groupon opportunities by email have been 1) Lame; 2) coached companies to run their prices up for month preceeding the "featured" 1/2 off or whatever Groupon promotion; 3) needs better partners - targeted Twitter, other social media that really knows where person is and then offers "deals" right in front of them.

My two cents.  Still, the fools will pile on and soar the deal before it gets pricked and drops.

chet's picture

Google is already shopping it's coupon service around.

Low barrier to entry for these internet companies.  You have to race like hell to be the first and biggest and hope to get established.  Worked for some like Amazon.  Failed for others like MySpace and AltaVista and countless others no one even remembers.

Mikebrah's picture

Lets be fair here....Google and Facebook respectively killed Altavista and MySpace.  While I wouldn't touch the GRPN stock, or even Facebook if/when it IPOs there is no denying that Google is/was a far, far superior search engine than Altavista.  That is why it got so popular in the first place, remember?


Same with Facebook.  It originated with college kids and was initially exclusively for that demographic.  This created a huge, legitimate network that created enough self-sustaining momentum and kept it on the legitimate track.  MySpace was open to any ass-clown with a computer and it rapidly turned into a sketchy, pedophile hotspot. 


Again, I'm not debating the stock valuations of any of the abovementioned companies but to suggest it was all a total fluke is inaccurate.  Google was amazingly simple and intuitive.  Facebook, same thing plus it felt "safe" to its users (although it most likely isn't).  These were deliberate marketing ploys.  Google still looks the same as it did 10 years ago.  It's the most simple, yet highly functional search out there. 


Just my $.02

chet's picture

I don't think it was a fluke.  But I think that both AltaVista and MySpace show how internet companies are always vulnerable to someone coming along and doing it better.

It could happen to Google or Facebook too.   Though Google has so much money and market share now that they set a high bar to overcome.

But Facebook may be just as vulnerable as MySpace.  There could be a guy named Zark Muckerberg writing code in a dorm room right now.  That's why they shouldn't have these ridiculous valuations.

Dingleberry Jones's picture

Cleanclog, what is the source image for your icon? It's fantastic.

Cursive's picture

And who is that? Chin is reminescent of Cybil Sheppard.

Cleanclog's picture

You are all too flattering.  Photographer is a friend.

Cursive's picture

Bet that's an interesting portfolio. :)

Dingleberry Jones's picture

Wait, are you saying that it's you? Regardless, it's a ridiculously impressive picture.

longorshort's picture

You really are a stupid fucktard. Folks read this as work and your not just showing cleavage there. We have enough unemployed people in the economy and do not need pictures of your fat ass adding to it.

longorshort's picture

You know dumbfuck, take some of your coupon money and buy some clothes for your profile. Does anyone look at this shit here WTF.

sabra1's picture

buy, and then short immediatly!

TheTmfreak's picture

Don't want to be the 122 dollar LNKD guy.

chet's picture

Hey, there's a whole new generation of traders on Wall Street and off that don't even remember 1999.

dark pools of soros's picture

exactly.  load up the truck with some Z and P coming later this year!!!   One letter NAZ stocks are all the rage!!!

buzzsaw99's picture

With a growth rate like that you gotta be a buyer bitchez!

XenoFrog's picture

Buy! buy! buy! *frothing at the mouth*

TooBearish's picture

TY- Is this gunna be priced tonite???  thx

lizzy36's picture

SHOW ME THE MONEY before QE2 ends....quickly.

Bam_Man's picture


This might be the last chance to fleece the retail crowd for quite a while.

chet's picture

Just like the dotcom days.  Build up just enough of a something to take it public.  The founders become very rich, don't give a crud if the company is still around in two years.  The IPO is the target, not a sustainable company.

I agree that time is very short for this round of nonsense.

rumblefish's picture

another wtf stock.

go figure....LKND is up and silver is down.

RobotTrader's picture

"Social Media" is the next bubble to be blown by Wall St. to create yet another frenzy.

Silver bubble already popped, it might re-emerge later this year.

rumblefish's picture

i don't believe sound money is in a bubble mr.robot.

I do believe market dillusion is beyond bubbles.

Bay of Pigs's picture

Once a bubble is popped, it doesn't "re-emerge", whatever the hell that's supposed to mean.

Silver and gold are the opposite of a bubble Robot Fader.

dark pools of soros's picture

Robot blows bubbles outta his rear unit

JW n FL's picture

I am gonna buy it...


and hold it....


and name it george...


and Love it...


and pet it...


and keep it forever....


buy early and get the fuck out! and then buy back in after the fall.. as coupons? may have a following in the near future that is even stronger that it has now!