Groupon is an American Internet company founded in 2008. The Chicago-based company operates a website selling local deals to its subscribers. Originally, Groupon offered one deal per day in selected metro areas in the United States. Today, the company operates in hundreds of markets all across the globe. Groupon is the largest group-buying or daily-deal website and has repeatedly acquired competitors to strengthen its market position or to enter new markets.
Since its start in 2008, Groupon has been growing rapidly. By the end of 2012,
Groupon had 41 million active customers.
In June 2011, Groupon filed with the U.S. Securities and Exchange Commission to go public later in 2011. The IPO filing was the first time the company published financial details, and the numbers Groupon initially reported caused a heated debate about Groupon’s accounting practice and the viability of its business model. In its original S-1 filing, Groupon reported profits based on a measure called adjusted consolidated segment operating income (ACSOI). This measure did not account for
Groupon’s huge customer acquisition costs and hence Groupon was able to report positive results from operations. Following massive criticism from regulators, analysts and the media, Groupon dropped ACSOI and the reported profits turned into the aforementioned losses. Although Groupon gave in to public pressure in dropping the disputed accounting practice, Groupon CEO Andrew Mason defended the original method. He argued that customer acquisition costs, omitted in the original filing, would vanish once Groupon had reached a certain customer base.
In September 2011, Groupon filed another amendment to its S1 filing that included changes to the way it calculated its revenue. The company had originally booked the full price of sold coupons as revenue, although part of that money belongs to
Groupon’s merchant partners. Changing this effectively cut revenues in half and further increased scepticism regarding the sustainability of Groupon’s business model. Despite all doubts, Groupon shares started trading at $28 on November 4, 2011, giving the company an implied valuation of roughly 18 billion U.S. dollars.
Groupon's stock hasn't performed too well since then. Disappointing results and ongoing doubts about the longevity of Groupon's business model, have let to a steady decline of Groupon's stock price. By February 2013, the company's stock price had dropped around 70 percent from the IPO price of $20.
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