A Look At Groupon's Lowest Moments
By Chuck Sudo in News on Mar 1, 2013 11:00PM
That’s still a far cry from the $26.11 per share Groupon stock ended the day of its initial public offering in November 2011. Since then Groupon stock has, in the words of Merle Haggard, rolled downhill like a snowball headed for hell.
Are the good times really over for good? That’s up to Executive Chairman Eric Lefkofsky, Vice Chairman Ted Leonisis and who they can find to succeed Mason, who offered few regrets and maintained his cheeky demeanor after news of his ouster spread. While seeing someone lose his job certainly sucks, Mason does still own 7.3 percent of Groupon stock — a value of over $212 million after stock markets closed Thursday.
We wrote yesterday that Mason’s irreverence was both his greatest strength and the cause of his downfall. Last year, Lefkofsky compared Mason’s leadership of Groupon to “giving a 7-year-old a Ferrari.” But Mason’s missteps, if we’re being honest, started well before the IPO. Here’s a timeline of some of the low water moments in Groupon’s history.
December 2010: Groupon Turns Down $6 Billion Offer From Google
This move was (and still is) ballsy, as it set in motion the chain of events that led to the IPO. Groupon's board was split on the offer: newer members wanted to test the IPO waters while older board members wanted the return on their investments they craved. There had long been speculation the deal didn't move forward because Google took a peek at Groupon's books, saw the company's problems with math, and backed away. Groupon's market cap today is $3 billion, far below Google's offer and a seeming lifetime away from the company's valuation after the IPO.
February 2011: Groupon's "What the Fuck?" Super Bowl ads.
One of the foundations of Groupon's early growth was the tongue-in-cheek nature with which it wrote its daily deals, which they extended to 30-second spots during Super Bowl XLV featuring Timothy Hutton enjoying Tibetan food while somberly discussing the human rights struggle in Tibet, Cuba Gooding Jr. crowing about the money he saved on a whale sightseeing tour, and Elizabeth Hurley bemoaning the razing of the Amazon rainforest while talking about all the money she saved on a Brazilian wax. It was a major misstep for a company trying to promote its mission. Mason, instead, took to the press to argue viewers didn't understand Groupon's humor.
"The gist of the concept is this: When groups of people act together to do something, it’s usually to help a cause. With Groupon, people act together to help themselves by getting great deals. So what if we did a parody of a celebrity-narrated, PSA-style commercial that you think is about some noble cause (such as “Save the Whales”), but then it’s revealed to actually be a passionate call to action to help yourself (as in “Save the Money”)?"
Viewers still weren't laughing. Neither were marketing experts. Legendary marketing exec Rohit Bhargava called Groupon's campaign the worst of Super Bowl XLV.
Groupon did not buy ad space for the Super Bowl again. Watch the original ads below.
June 2011: Questions Abound About Groupon's Losses After the Company Files Its IPO Prospectus
Tongues were wagging when Groupon valued itself at $750 million in its IPO prospectus filing. (That's a lot of deals, folks.) Analysts began expressing reservations about that value and the long-term future of the company after they were finally able to take a look at how Groupon handled its accounting. Posting a loss of $103 million for the first quarter of 2011, and a cumulative loss of over nearly $604 million, will do that. Although Mason and Groupon tried to spin it as best they could, The Awl's Choire Sicha noted Groupon, before taxes, lost $456 million in 2010. Analysts were concerned about the high overhead and expenses Groupon was operating under. Mason and other executives in the company would say they were working to reduce the expenses, but they couldn't put a dent in it. Analyst Sucharita Mulpuru said Groupon's valuation "wasn't rational math." The SEC's concerns with how Groupon measured profitability led to several amended filings of the prospectus.
August 2011: Mason Can't Keep Quiet During The IPO Silent Period
The filing of an IPO prospectus is followed by an SEC-mandated "quiet period" where executives for companies looking to go public can't engage in "pump and dump" schemes while the SEC reviews a filing. Bradford Williams, the company's vice president of global communications, abruptly left the company after only two months on the job amidst reports he and Mason had differing views on how to address the media. That was right around the time a memo penned by Mason was leaked to the press where he told employees the company was "stronger than ever" and "the best thing that's happened to small businesses since the telephone."
Nov. 2011: The Bloom is Off the Rose
By the end of November Groupon stock was down to under $17 a share as the ongoing stories about the company's accounting practices became more frequent. Forbes' Panos Mourdoukoutas also noted a growing number of imitators entering the daily deal market and the company's business model didn't make it a strong investment.
Feb. 2012: Groupon Releases Its First Post-IPO Earnings Report
Uh-oh. Despite posting increased revenues of $506.5 million in Q4 of 2011 over the same time period in 2010, Groupon posted a loss of $42.7 million. Stock in the company tumbled by 14 percent after the report was released. Mason tried to look at the bright side of the report:
Groupon had a strong fourth quarter and we finished 2011 having helped 250,000 local merchants across 47 countries grow their businesses while saving Groupon customers billions of dollars. We will continue to invest in new services and tools that help our merchant partners be more successful and drive local commerce around the world.
Or maybe some Groupon subscribers were okay with buying crap at a drug store for full price rather than wait for it to be mailed through Groupon Goods.
November 2012: Mason Is Put On Notice
Sources told Business Insider Mason had until the end of 2013 to stop the bleeding at Groupon. Turned out he didn't even have that long. Mason revealed for the first time the free fall of Groupon stock had the company's board asking if he was the right person for the job.
"Here's a news flash: Our stock is down about 80 percent since we IPO-ed a year ago," said Mason. "It would be weird if the board wasn't discussing whether I'm the right guy to do the job. It's actually their chief responsibility to ask that question, as they have asked that question in the past."
And now for those embarrassingly terrible Super Bowl ads: