Joining the Group: Another Internet IPO Delay

by Todd Shriber

Add daily deals purveyor Groupon to the list of hot Internet start-ups that have delayed plans for an initial public offering.

Just a week after Zynga, the company behind the Facebook games FarmVille, CityVille and Mafia Wars, said it would delay its IPO, Groupon appears to have gotten a case of IPO cold feet as well.

No surprise here, at least in terms of the reason Chicago-based Groupon is giving. Market volatility appears to be the culprit, The Wall Street Journal reported, citing a source familiar with the matter. The delayed Groupon IPO is sure to sting a bit for bankers, Groupon insiders and early investors alike.

In early June, the Journal reported that a $1 billion IPO by Groupon could value the company at $20 billion. Around the same time, Bloomberg reported the company was potentially chasing a whopping $25 billion valuation.

Groupon’s publicly traded valuation will have to wait as a roadshow that was planned for next week has been canceled. While Groupon’s IPO plans have not been scrapped outright, the delay arguably underscores some thorny issues the company has had to deal with. Not only is Groupon not yet profitable like Zynga is, but the company found its way into hot water with the Securities and Exchange Commission for using a controversial accounting metric, The Wall Street Journal said.

Groupon has reportedly stopped using that accounting method, but the Journal said the SEC contacted Groupon last week about another matter. Insiders say the SEC’s concerns aren’t the reason for Groupon delaying its IPO, the article said. But even with that, there is no word yet on when the company plans to go public.

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1 Comment for “Joining the Group: Another Internet IPO Delay”

  1. Groupon is NOT an internet company; they are an email company promoting a business model that has intense competition from Living Social, Google Offers, and a half dozen other similar companies.

    Groupon could have gone public months ago if it had used GAAP and if it wasn”t losing more and more money with every expansion.

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