Groupon stock falls to all-time low as IPO anniversary nears
Nov 02, 2012 (Menafn - Chicago Tribune - McClatchy-Tribune Information Services via COMTEX) --Shares of Chicago-based Groupon Inc. fell to an all-time low Friday as the company approaches the one-year anniversary of its initial public offering.
Groupon stock closed down 5 percent at 3.83 after having dipped as low as 3.68. This represents an 81 percent decline from its IPO price of 20. The daily deals company went public on Nov. 4, 2011 and has spent most of its first year as a public company battling skepticism over its ability to maintain a strong rate of revenue growth and the sustainability of the online coupons business model it pioneered. More recently, Sandy prompted Groupon to postpone daily deals in most of its markets in the northeastern U.S. unless merchants contacted the company to say they wanted to run their promotions as scheduled.
Groupon is scheduled to report third-quarter earnings on Thursday. Groupon has been revamping its strategy, introducing a variety of technology-backed tools for local merchants such as mobile payments, scheduling services and a loyalty program. These new offerings are aimed at making the company what co-founder and Chief Executive Andrew Mason has called the "world's first marketplace for local commerce."
Separately, Groupon Inc, responding to regulators' inquiries into a controversial revision of its fourth-quarter results and handling of refunds, has promised to shore up disclosure but stopped short of agreeing to outline the performance of individual products from travel to concert deals.
The U.S. Securities and Exchange Commission asked Groupon in August to provide a wealth of information and explain its reporting on a plethora of financial metrics. Groupon's response was made public on Friday, underscoring the extent to which the commission continued to probe into its internal accounting months after the Internet deals leader went public.
Many of the SEC's queries revolved around how it estimates customer refunds under the "Groupon Promise", under which subscribers that change their minds get their money back in full.
An unexpectedly large number of refunds for fast-growing, costlier new services such as Groupon Getaways helped prompt the results revision in April, and is considered by some analysts to be a major risk to the company's cash flow.
"The maximum amount of future or potential refunds, or total unredeemed vouchers, is not a metric that the company currently evaluates," the company said in its Friday filing, portions of which were redacted.
"The company is able to make reasonable estimates of potential future refunds at the time the vouchers are purchased without tracking the amount of total unredeemed vouchers outstanding."
The daily deals industry leader has grappled with myriad accounting problems since its highly touted 2011 debut, highlighting a need for more financial sophistication on its board, analysts say.
Once the consumer dotcom darling of Wall Street, Groupon stock has shed over three-quarters of its value since it began trading at 20 and on Friday, it lost another 8 percent to hit an all-time low of 3.68.
In April, it revised its fourth-quarter results, resulting in a bigger net loss and lower revenue than it had previously reported due to higher-than-anticipated refunds on deals. The company admitted at the time that it had a "material weakness" in internal controls over its financial statements.
Groupon's "accounting organization and its financial statement close process were not able to adequately keep pace with the rapid growth of the Company," it said on Friday.
"The year-end financial statement close process was further impacted by a number of operational and organizational changes in the fourth quarter of 2011."
Reuters contributed.
wawong@tribune.com
___ (c)2012 Chicago Tribune Visit the Chicago Tribune at www.chicagotribune.com
Distributed by MCT Information Services
Copyright (C) 2012, Chicago Tribune
