Groupon ($GRPN) has been in the news again for accounting irregularity. It restated fourth quarter earnings. What was amazing is that it went public in the fourth quarter…..and it had a couple run ins on accounting before it went public.
“Three strikes and you’re out.”, is the saying. The market is punishing the company.
Whether you agree with the business model of Groupon or not, you have to respect how quickly it grew. Venture Capitalists aren’t stupid, and they tossed a lot of money in succeeding rounds of Groupon. Some think the business model is about to collapse.
I can’t weigh in on those things. But I can weigh in on the accounting issues. The longer this drags out, the more Groupon starts to resemble Enron. They will get into more trouble, and the stock will become worthless. They only have themselves to blame for the crisis that confronts them today.