Report: SEC probe casts new doubt on Groupon IPO timing
Although Groupon executives continue to push ahead with plans for an initial public offering, sources tell The Wall Street Journal that the timing of the daily deals giant's IPO is increasingly unclear due to intense scrutiny from the Securities and Exchange Commission as well as continued stock market volatility.
Groupon initially filed to go public in June, seeking a valuation of $20 billion. According to the WSJ, Groupon remains committed to the plan, and major shareholders including Capital Group Cos., T-Rowe Price Group Inc., Fidelity Investments and Morgan Stanley Investment Management have all confirmed their continued interest in the stock as well. But the SEC has questioned Groupon's accounting practices, and on Friday, the startup amended its offering filing to reduce its reported 2010 revenue from $713.4 million to $312.9 million. Sam Hamadeh, founder of research firm PrivCo, called the revenue cutback "a shock to the valuation."
Friday's filing also included parts of an internal memo written by Groupon CEO Andrew Mason to employees in which he balked at speculation the firm is running out of money. Making public statements about a company's financial status during its IPO process is prohibited by SEC rules. Although the inclusion of the letter is seen as an attempt to placate the SEC, the agency could still require a "cooling off period" that could further delay its IPO schedule, sources said.
Groupon also must replace its COO, Margo Georgiadis. In a blog post Friday, Mason announced Georgiadis is exiting the company after just five months on the job. She will return to her former employer Google (NASDAQ:GOOG) in the new role of president of the Americas.
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