Losing millions... insiders cashing out... Surprise! GroupOn delays IPO
GroupOn has decided to wait a bit to go public (see Anticipated Groupon IPO getting pushed back (msnbc). They say it's because the markets are so bad right now, but I kinda think it might be because they're getting the crap beat out of them in the news.
First off, they're losing money so fast Stephen Hawking is revising the universal speed limit from the speed of light to the speed GroupOn hemorrhages cash. In the first three months of this year, they lost $103 million. For all of 2010, its loss was $414 million.
Then there's the fact they're losing money for some of their customers. See my blog, GroupOn -- Good for Meth Dealers, bad for Fishing Guides. Of course, I can't blame GroupOn because they did a deal that their customers (the businesses) couldn't support.
But it does bring me to the next point that GroupOn is a flash in the pan. It's grossly overvalued -- see my blogs Countries less valuable than GroupOn and The I-Don't-Understand-It-So-It-Must-Be-Valuable Valuation. I don't really see how waiting to go public is going to help the fact that people are starting to realize that maybe GroupOn shouldn't be more valuable than the GDP of El Salvador. Except for that insider trading thing…
Turns out the founders took $870 million off the table by clearing a bunch of cash out of the company -- and by a bunch I mean they pocketed $130 million in cash. They took investor money and company earned money. In other words, it looks like they might be looting the company already (see Sorry, There's Just No Good Excuse For The Amount Of Insider Selling Going On At Groupon on Business Insider.
Now in one sense, I don't really care that these guys are running a rock-star investment scheme. But… this is 2011. We're still in the throws of an economic mess caused by investment scandal -- and I'm not sure what you would call this if not investment scandal.
I just wish people would learn… but if they did, we'd probably all be living like the Amish in Pennsylvania. I'm guessing they aren't investing a bunch of money in a coupon email service.