Groupon 1, Reality 0

More here about the Groupon IPO. Note that it's a tiny sale compared to the full equity value of the firm.

Another neat point is the mention of LinkedIn's 9% price drop when they announced more shares sold after IPO. That could be an effect of the investor that sold, but who knows. Whatever it is, managers will have to make up the drop somewhere else.

Here's another link to LinkedIn's IPO info, from the New Yorker. They had a small chunk issued, too, back in May of this year. Yahoo Finance for LinkedIn looks like this.

The article mentions Pandora, the online radio firm that debuted recently too. Yahoo Finance here.

Finally, compare all of these to the grand-daddy of them all: Google.

And Apple, I guess.

Groupon gets into more mud with accounting measures

This may be old news, but Groupon has changed its income accounting yet again. In anticipation of eventually completing its IPO, Groupon just keeps revising things, hoping that the next revision will make everything alright for investors and the SEC simultaneously.

In August, the firm dropped Adjusted Consolidated Segment Operating Income, or ACSOI, from its IPO submission. ACSOI isn't GAAP, and it sounds fishy. But it shows how hard it is to reconcile investment with accounting sometimes; ACSOI allows them attempt to measure the value of their customer network or loyalty, or something, and amortize marketing costs over time. Unfortunately, it's just too fishy. Accounting has to figure out how to deal with fishy, I guess.

There were also questions in July, when I started looking at Groupon and its ilk and wondering how it wasn't a cash flow Ponzi scheme.

Didn't ZZZZ Best run into this kind of trouble?

There was another recent business model that suffered from the inability to amortize marketing expense properly, but I can't recall what it was. Hmmm.