It’s Goof-on at Groupon Again

The world’s top daily-deals site, Groupon (NASDAQ:GRPN), has announced a restatement of its fourth-quarter earnings. This is fairly unusual for a newly public company — and Wall Street is worried. In pre-market trading Monday, the stock was off about 10% — and at an expected open around $16.50, GRPN is well below its early November IPO price of $20.

Essentially, Groupon did not adequately account for the expected returns of vouchers for Q1. As a result, the company’s revenues were about $14.3 million worse, at $492.2 million, boosting the company’s loss to $65 million from an original reported loss of $43 million.

This is not Groupon’s first restatement. Last year, the Securities and Exchange Commission pressured the company to change how it recognized its revenues. The federal agency thought it was not proper to include the full amount of the voucher, since part of it went to the merchant, which meant Groupon’s revenues were reduced from $713.4 million to $312.9 for 2010.

The SEC also required Groupon to de-emphasize its use of a creative accounting metric called “Adjusted Consolidated Segment Operating Income.” This basically stripped out most of Groupon’s marketing costs, which made the company look much more profitable. Convenient, huh?

But the latest restatement is particularly troubling for investors. Groupon is selling higher-priced vouchers — such as for travel and even cosmetic procedures — that have a higher risk of being refunded. Forecasting amid such risks can be extremely difficult, which means there could be even more nasty surprises ahead.

Groupon also disclosed on Friday that its auditor, Ernst & Young, discovered a “material weakness in its internal controls” for 2011. There was no mention of any specifics, but it is something else for investors to fret about. Let’s face it: Groupon has been growing like a weed and has more than 10,000 employees, and the company has gone through two chief financial officers during the past year. The situation must be a nightmare for the accounting department.

Still, other hot social companies, like Zynga (NASDAQ:ZNGA), LinkedIn (NYSE:LNKD) and Pandora (NYSE:P), have not experienced these kinds of accounting issues, despite the fact that they too are growing at breackneck speeds and have dynamic business models.

Groupon’s accounting might just be an attempt to mask a weak business model. Even though the company posted $1.6 billion in revenues last year, it still was not able to turn a profit. The company continues to pour huge amounts into marketing and also must fend off a host of tough rivals like Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG) and LivingSocial. True, Groupon has been expanding its platform, such as by offering services for small businesses, but these efforts still are in their early stages.

And on the horizon? In early May, Groupon’s lock-up will expire, which will allow insiders to dump their stock. So a tip to investors: It’s probably not a good idea to get into GRPN shares anytime soon.

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.

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