Groupon (NASDAQ:GRPN) CEO Andrew Mason is 31 years old — but he’s going on 14. According to the The Wall Street Journal, he held an employee meeting where he said the company needed to “grow up.” During his presentation, he was drinking beer. With such wacky behavior, it should be no surprise that the stock is off 40% from its IPO price (the company came public in November 2011).
Mason plans to have these presentations on a weekly basis. And yes, anyone present can drink beer, too.
Somehow this is supposed to be a way to get the company back on track. In early April, Groupon dropped a bombshell on Wall Street when it disclosed a restatement of its earnings. The company failed to account for the expected returns of vouchers for the first quarter. Because of this, revenues were $14.3 million lower, at $492.2 million. The net loss also had to be boosted to $65 million from $43 million.
Oh, and there was a “material weakness” in Groupon’s internal controls. The Securities & Exchange Commission has launched a preliminary investigation.
With Groupon’s hyper growth, it has certainly been tough to manage operations. But then again, other hot social companies like Zynga (NASDAQ:ZNGA), LinkedIn (NYSE:LNKD) and Pandora (NYSE:P) haven’t disclosed any problems with accounting. However, their CEOs all are proven executives.
True, it’s important for a company like Groupon to keep its creative ways, which have been critical in differentiating itself from the hundreds of competitors.
But Mason must understand that Wall Street can be brutal and that there are important boundaries. In fact, if he continues to behave like a buffoon, it will get tougher to find top-notch executives. Groupon is looking to bolster its ranks as well as the board.
Since its founding in late 2008, the company has quickly turned into an incredibly complex organization. It now has over 11,000 employees across 44 countries, and revenues came to $1.6 billion last year. To manage this, a CEO needs to be a strong leader, not a comedian.
That’s why shareholders need to be cautious. Consider that Groupon’s lock-up expires on May 2, which will allow its insiders to unload their shares. That could mean even more pressure on the stock — and another reason to drink.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”, “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.