7th June 2011
Pratley is worried, not just because Groupon is yet to make money but because of a calculation, it is making about future operating expenses.
Here is the key passage from his comment piece.
"The hope is that profits will appear once less has to be spent on acquiring new customers. As if to encourage this thought, Groupon has invented a measure called "adjusted consolidated segment operating income" in which costs that are "not indicative of future operating expenses" are excluded. On this basis, it made income of $81.6m in the first quarter."
Pratley is not the only recent critic.
Here the Wall Street Journal's deal journal blog looks at the practicalities of what Groupon offers and suggests rivals may be more effective at converting vouchers to business.
The blog questions whether Groupon's tactic of offering lot of deals to a large email subscriber base is what counts or if the number of deals converted is a better measure.
Seeking Alpha asks is the IPO valued and overhyped here.
However the Chicago Tribune points out that the deal will lead to the creation of three new billionaires.
Here CNN notes the irreverent approach to the group's IPO document with Andrew Mason suggesting is his letter to potential investors that ‘life is too short to be a boring company' but the website also reports on more sober financial disclosures. "Most of the $1 billion Groupon raised last year went to cash out company executives and early investors, who sold off some of their holdings for $31.59 per share. Andrew Mason collected $10 million from the sale, and ex-CTO Pelletier took home $8 million. Funds controlled by co-founder Eric Lefkofsky cashed out a whopping $319 million," it reports.
It certainly looks like a lot of analysts and journalists think investors would do well to read beyond the jokes before committing to buying shares.
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