Groupon IPO: Pass on this deal
Groupon has filed its S-1 and hopes to raise $750M in its initial public offering. Given they're currently losing a staggering $117M per quarter, despite revenues of $644M, they'll be burning through that cash almost as soon as it hits their account.
Context & Ripple Effects
Groupon's S-1 lands weeks after reports — never confirmed — that the company was pressing to file for its IPO as early as possible, even without its bankers fully involved, and days after CEO Andrew Mason sidestepped IPO questions at the D conference. The timing matters because the filing puts hard numbers on what until now had been a private-company story: employees at hot startups including Facebook, Groupon and Twitter were already selling shares ahead of any listing.
The disclosed math is the story: $644M in quarterly revenue set against $117M in quarterly losses means the targeted $750M raise covers roughly six quarters of burn at the current rate. With a half-price hotel-and-airfare booking venture alongside Expedia announced at D on June 1, the IPO is less an exit than a fuel stop — and Short Logic's argument is that the tank refills too slowly.
First-order effects
- Retail buyers of the offering inherit a business consuming $117M a quarter: the $750M raised is earmarked by arithmetic, not choice, to keep funding operations rather than build anything new.
- Underwriters face a pricing problem — marketing a $750M deal whose own S-1 shows losses running at nearly 20% of revenue gives skeptics like Short Logic their entire case.
Second-order effects
- The Expedia travel-booking partnership announced at D becomes a live test of whether deal-site traffic converts into new categories fast enough to bend the loss curve before the raise runs down.
- Pre-IPO share sales by employees at Groupon and peers sharpen a two-tier market: insiders monetize privately while public investors are asked to absorb the ongoing burn.
Third-order effects
- If the pattern holds, late-stage consumer-web companies face a structural trade-off: file while still losing heavily and let the S-1 expose unit economics to public scrutiny, or stay private longer while secondary markets let insiders cash out first.
- Sustained losses at this scale invite the next wave of local-commerce competitors to position on profitability rather than growth, shifting the category's pitch from land-grab to unit economics.
The trend: Consumer-web startups are reaching the public markets while still scaling steep losses, letting S-1 disclosures — not roadshow narratives — set the debate over whether the model works.