Groupon’s path toward an IPO is no longer a cakewalk.
The daily deals darling has lost some of its sheen after giving analysts and investors a clearer look at its troubling financials.
At the same time, the teetering stock market has made the environment far less favorable for IPOs, raising doubts that Groupon can attain the lofty $30 billion valuation many had expected.
Analysts said they believe Groupon’s bankers will persuade the company to lower its expected offering price by about 30 percent when it sells shares to the public, expected as soon as next month.
Yesterday, Groupon filed another amended S-1 with the Securities and Exchange Commission. It marked the ninth change to the prospectus since June, when Groupon first announced its intention to go public.
The updated filing showed that the company continues to spend heavily to boost its remarkable revenues.
In the first six months of the year, Groupon generated $1.5 billion in revenue, compared to $130 million in the same period a year ago. Groupon splits revenue with the merchants who offer the deals through its platform.
Fueled by aggressive expansion and marketing, the remarkable growth came at a cost, with the company spending its way to a loss of $220 million in the first half.
“Obviously, the growth is attributed to the intensity by which they conduct their marketing,” said analyst David Menlow of IPO Financial.
Groupon had tried to spin the numbers differently in earlier SEC filings, in which it emphasized an internal, unconventional accounting metric called “adjusted consolidated segment operating income.”
Regulators told the company to cut out the questionable metric, which subtracted the big spending from the equation under the rationalization that they were one-time costs.
The newness of Groupon’s daily deals market makes it unclear if it can lower the rate at which it spends to acquire and keep customers, analysts said.