Wednesday, November 2, 2011

Crisis in Groupon Boardroom & Greek Coup Du Etat?

It's been written on these pages since the beginning of 2011: Groupon has BIG trouble. Now, with events in Greece completely throwing a wrench into the Eurozone and markets, it looks like Groupon could suffer greatly from events in Athens. It must be confirmed by the latest news today: There must be crisis in the EU and the Groupon boardroom bordering on a full-blown panic.

Here's the details you need to know:

Groupon IPO is Nov. 4th, 2011. They are expected to price on Nov. 3.

The stock market is crashing on fears of a Greek referendum on an EU funded bailout. Who is in charge of Greece? No one knows.

The Dow Jones lost nearly 2.5% today.

Nov. 1, 2011. Two days before Groupon pricing Dow Jones
drops nearly 2.5%... Situation in Europe up in the air. 

Groupon must IPO. Their situation is getting serious. They have yet to turn a profit and, if the books were closed today, they'd be over $221.7 million dollars in the red. Groupon is running out of cash.

SF Gate reports:

Groupon remains unprofitable. The company had $243.9 million in cash at the end of September and still owed merchants $465.6 million. The 8.4 percent increase in cash from the prior period was outstripped by the rise in marketing costs, which jumped 37 percent to $234.4 million.

The company has used 85 percent of the $1.11 billion it has raised from venture capitalists and other investors to buy equity from early investors eager for a return, instead of funding growth. That is contributing to a potential cash crunch, said Sam Hamadeh, chief executive officer of PrivCo, which provides financial data on more than 20,000 private companies.

With two days to go until IPO and the stock market's crashing worldwide, then Groupon must be in a panic... If not, then the stuff they were smoking when they rejected the $6 billion dollar offer from Google must be really killer weed! 

*NOTE & IMPORTANT UPDATE: Let me go on a limb here. I predict that Greece will exit the Euro as Panpadreou has replaced all his military leaders (they were NATO experienced). I suggest that this portends a Euro zone departure. This is roil markets even more in the next 24 hours. This move seems to be an effort to head off a military coup de etat.

Mish Shedlock has an interesting take in Is Papandreou Preparing for a Military Coup or Afraid of One?

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