Groupon IPO: A First Anniversary to Forget

A year ago, daily-deals site Groupon (NASDAQ:GRPN) came public to a strong reception. Despite a turbulent IPO process that even included restating earnings, the deal launched with 35 million shares priced at $20 each, shares rose by 30% on the opening day, and they’d eventually hit a high of nearly $27.

A year later, GRPN shares sit below $4, with many investors left angry, sad … even confused.

Granted, Groupon’s was far from the only IPO disaster in the social space. Facebook‘s (NASDAQ:FB) travails are well-documented, as has the exodus at gamemaker Zynga (NASDAQ:ZNGA).

But unlike those companies, Groupon has not only suffered on the business side — it also seems to find new and adventurous ways to shoot itself in the foot.

In early April, the company announced yet another restatement of its earnings. Groupon failed to account for the expected returns of vouchers for the first quarter, and as a result, revenues were revised $14.3 million lower to $492.2 million, and the net loss grew from $43 million to $65 million. The fallout that week was a 23% haircut to Groupon stock.

Later on, the Wall Street Journal published a story that noted that Groupon’s co-founder and CEO, Andrew Mason, drank beer at a company townhall (and — gasp! — he burped at least once). While the stunt was an attempt to bring the company together, it didn’t go over well with many outsiders looking in.

And of course, Groupon’s loss in market value made another decision seem foolish in retrospect. Back in late 2010, Google (NASDAQ:GOOG) offered to acquire Groupon for $6 billion. The deal was rejected because the valuation was deemed too low — yet today, GRPN sits at $2.6 billion in market capitalization.

Yet for investors, the big concern has been Groupon’s growth story, which seems to be fading away. In the latest quarter, revenues grew just more than 1% following numerous quarters of double-digit growth. The headline number of $568.3 million also came up flat, some $5 million shy of Wall Street estimates, and came despite Groupon broadening its business by selling physical goods.

The move into physical goods is doubly troubling when you consider the long-term. Selling goods at a discount usually results in low margins, which also could weigh Groupon down on the bottom line, too.

Still, the company has some hope for the future. Groupon has a global infrastructure, holding the No. 1 positions in 37 countries and amassing more than 38 million customers. On the stock side of things, its valuation of 1.2 times revenues is fairly low, too.

If anything, there could be a surprise on the upside when the company reports its earnings Thursday. If nothing else, sentiment can’t get much more negative.

Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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