The Street is closely watching the Groupon IPO which is expected to price on Thursday and begin trading on Friday.
Ahead of the offering, the company landed in the spotlight after theNew York Times raised some questions about Groupon’s financials and how the numbers are reported.
The author of that story, Anthony Catanach, an associate professor at the Villanova School Of Business wrote:
Over the last few months, Groupon has raised serious concerns about the reliability of its numbers in a series of well-publicized financial reporting miscues.
First, in August the Securities and Exchange Commission required the company to amend its registration statement for its use of the controversial “Acsoi” metric, which understated operating losses by $120 million by excluding noncash expenses and online marketing expenses. In September, the S.E.C. forced yet another registration statement amendment, this time to correct the company’s method of reporting revenue.
In this case, Groupon was caught inflating revenue by $400 million in 2010. Clearly, the proof is not in Groupon’s numbers, and the road show does little to address concerns about the quality of the company’s financial reporting disclosures.
Groupon’s latest prospectus, filed on Tuesday, shows little change in the financial picture, with negative shareholder equity and negative working capital.
The Fast Money traders were so intrigued by the commentary, they asked Anthony Catanach to join the panel on Wednesday. If you plan to trade Groupon stock don’t make a move until you check out this interview. Watch the video now!
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