Friday, September 02, 2011
Groupon is a company with a problem of its own making. When it first tried to file to go public, it used such non-standard accounting that the Securities and Exchange Commission balked. Groupon refiled its financials that showed a much greater loss than previously claimed. At that point, it had the hallmarks of a bubble stock, and journalists pounced. Defending the company hasn't been easy. It's head of PR left and the agency representing the company is now trying to staunch the bad news with actions like this. The PR firm's efforts are understandable, but Groupon put itself in a bad position that only time will resolve. It has to show a record of smaller losses leading to profit or small profits leading to larger ones. The firm doesn't appear to be near that yet. Meanwhile, its proposed valuation seems grossly inflated. This is a time for the firm to live with the mess it made and to focus on getting its business right. If it can't find a workable model, no amount of media hawking is going to help it.