The Groupon IPO

A 50% discount in their most recent valuation, staying true to their half price business model.

Was it all too good to be true? Is the daily couponing giant Groupon really in such bad shape? This is the company that popped up out of nowhere, immediately gained traction around the world, and made headlines by turning down Google. Now, with an indefinite delay of their much hyped IPO, it’s time to examine the state of Groupon.

Leadership at Groupon has rightfully come under fire. CEO Andrew Miller is perceived by many as immature and not fit to lead. The most recent incident involved an internal e-mail that was somehow leaked to a few media outlets. Washington Post columnist Vivek Wadhwa had harsh words, in a recent interview she said “Groupon CEO Andrew Mason’s e-mail to his staff was “childish”; the company should delay its IPO rather than contribute to a growing social media bubble”.

It is hard to disagree.

The Business Model is unsustainable. There is an increased sense that the daily deal excitement has already begun to wear off. One of the major issues is that participating merchants have been losing money with their daily deals. Of course, loyal fans believe that the young company is simply experiencing growing pains. Groupon is young; presently, they are an example of huge growth at an extreme pace.

Some of this negative attention seems a tad unfair considering Groupon officials cannot comment or make public statements regarding the IPO issue because of the silent period. But, is Groupon dead? It still has a core customer base and the organization has placed an emphasis on continued innovation, which means that they may be able to adapt. Still, changes need to be made. It may be a product change, an addition or a leadership shake up, but don’t count them out. Groupon did turn down $6 billion dollars from Google and they’re not dead yet.

 

Bryan Cox, Digital Strategic Planner

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