Groupon is keeping mum about why it has canceled its IPO road show scheduled for next week, so I guess we'll have to fill the void with idle speculation. I'm up for it!
The Wall Street Journal has reported that the daily deals website "is reevaluating plans for an initial public offering in the face of stock-market volatility, said a person familiar with the matter."
(Quick aside: Does the WSJ get all its news from "a person familiar with the matter"? I'd like to see one of their sources legally change his or her name to "A Person Familiar With the Matter." That way they couldn't hide behind anonymity. Just an idea.)
Is there volatility in the stock market these days? Undoubtedly. But you have to also wonder whether Groupon's decision (idle speculation coming up!) is grounded to a large extent in the battering the Chicago-based company has endured from financial analysts and observers regarding its huge losses, questionable accounting practices and ability to continue growing in the face of increasing competition.
According to the WSJ, its source "acknowledged that senior Groupon executives have been discussing the fallout of all the negative press as it seeks to attract investors," which has made it "increasingly difficult to run the company."
I get why the bad press would make it hard to drum up enthusiasm among investors, but what does it have to do with the day-to-day job of running the company? Are Groupon employees hiding in bunkers, battling depression, or engaging in uprisings? Can you imagine a pro football coach claiming that bad press is making it hard to run the team? That would rightfully be called lame.
Then there was 30-year-old CEO Andrew Mason's comments in an internal memo, in which he allegedly talked up Groupon and slammed its critics. Sounds innocent enough, but it violated Securities and Exchange Commission "quiet period" rules prohibiting public comments about a company's financial condition during the IPO process.
Some investors apparently feel Mason's gaffe also prompted a delay of the Groupon IPO until the fallout blows over, but Frank Reed over at Marketing Pilgrim thinks Mason's blunder points to a larger problem: Mason himself.
"In my opinion, Groupon’s CEO Andrew Mason is a huckster. He is young and acts as if the rules don’t apply to him or his company. There’s nothing wrong with confidence, in fact that’s a necessary quality of an effective leader. It’s when the confidence is a cover for arrogance and a seeming disdain for anything that gets in his way of getting to where he wants that is troubling. ...
When your lead dog is characterized as childish by folks in the industry that is not the kind of image a company needs to project when they are trying to get people to invest in them. ...The longer Andrew Mason is allowed to simply thumb his nose at the process and the rules of taking a company public the more damage he does to the brand. It quickly goes from “Oh, isn’t he cool because he is doing his own thing!” to “What the heck is this guy up to?” and that’s not good.
Reed is absolutely correct. The question is, can Mason turn around negative opinions about himself and Groupon? If not, it will be challenging for Groupon to pull off the IPO that's supposed to give it a $20 billion valuation.
The longer Groupon's IPO twists in the wind, the better that $6 billion acquisition offer from Google -- which was immediately and emphatically rejected late last year -- is going to look.