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The mother of all daily deals sites has cancelled its investor roadshow and is reevaluating plans for an initial public offering in the face of stock-market volatility, said a Wall Street Journal source.
He added that Groupon had originally been aiming to go public after Labor Day, and to price its shares in mid-September.
When Groupon filed to go public in early June, it attracted criticism for its high marketing costs and non-revenue. The company was also asked by the Securities and Exchange Commission to remove an unusual accounting metric, dubbed the ACSOI (Adjusted Consolidated Segment Operating Income) which painted a more robust picture of its performance.
ACSOI excludes online marketing expenses, stock-based compensation and acquisition-related items.
Last week, the SEC also contacted a Groupon attorney over a leaked internal memo from Groupon CEO, Andrew Mason to his staff, in which he touted the company and blasted its critics. Making public statements about the financial status of a company during an IPO process is prohibited by SEC rules.
Groupon was founded two and a half years ago and has been racking up huge losses as more competitors enter into the space. Singapore alone has about 39 Groupon clones.
To keep pace, Groupon has allocated a large portion of its revenue to marketing to acquire new subscribers – this gets more costly over time. Because of these conditions, analysts have questioned whether the company’s business model is truly sustainable.
But this may not be the only reason for Groupon’s IPO hesitation – the pace of U.S. IPOs, which was running at a monthly average of 12 deals worth $4.2 billion through July of this year, slowed to just three IPOs worth $867 million in August, according to Dealogic.