News Recap: Groupon’s Financial Troubles
Groupon took flak this week after the daily deals giant restated its fourth quarter earnings and cited inadequate resources allocated for refunds. In the wake of the restatement, the recently public company’s stock price plummeted, the SEC initiated a probe into its business practices, and it was hit with a stockholder’s lawsuit.
Here’s a look back at some of the coverage of Groupon’s troubling week:
“According to a complaint filed in federal court in Groupon’s hometown of Chicago, the company overstated revenue, issued materially false and misleading financial results, and concealed how its business was not growing as fast and was not nearly as resistant to competition as it had suggested.” (MSNBC)
“Groupon is now a case study in why every investor needs to apply due diligence and skepticism when it comes to trendy stocks.” (The Street)
“Both Groupon’s rapid revenue escalation and its time to IPO and are key points to what the company has been going through since it went public. Even as a fairly big Groupon critic let me be clear: Most of Groupon’s woes go back to one serious misstep. It went public years too early.” (Sarah Lacy, PandoDaily)
“In the first of what is likely to be a parade of lawsuits, a Chicago man is seeking compensation on behalf of shareholders who were allegedly tricked into buying the stock at artificially high prices.” (Paid Content)
“It is possible … that Groupon’s trajectory could be downhill from here. The company may be done in by too much competition and a business model that more and more merchants are shunning.” (TechNewsWorld)
Meanwhile, here’s how the Twitterverse reacted:
“Not saying that this is what they did, but if you wanted to create a business optimized to defraud investors, you would create Groupon.” (@rakeshlobster)
“It could be an innocent accounting error or an effort to mislead investors, too soon to tell.” Frmr SEC atty Mark Fickes on Groupon probe” (@emilychangtv)
“Has a company ever gone from IPO to SEC probe faster than Groupon?” (@Lessien)
“bad week for Groupon: Groupon revises 4th quarter results, shares fall; settles coupon expiration lawsuits for $8.5 mln; SEC Probes Groupon” (@hemmons)
“The earnings restatement by Groupon & subsequent market reaction highlights that their business model isn’t very well understood” (@KevinGandiya)
Isa Jones is an intern at Street Fight.