Student Y Memo.docx - MEMORANDUM To Professor Orpurt From Student Y Date Sometime during 2019 Subject Case analysis \u2013 Groupon and the SEC Groupon\u2019s

Student Y Memo.docx - MEMORANDUM To Professor Orpurt From...

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MEMORANDUM To: Professor Orpurt From: Student Y Date: Sometime during 2019 Subject: Case analysis – Groupon and the SEC Groupon’s ambition, and subsequent actions, to take their company public in 2011 brought a somewhat negative light to their brand. The company’s CEO, Andrew Mason, focused heavily on growth and promised investors a bright future. He even publicly stated, “All the stuff that one would want to look good? It looks good.” But in reality, his statement wasn’t entirely true. At the time, Groupon was growing rapidly, and cash was flowing in. However, their focus on growth was driving acquisition and online marketing costs way up. It also noted that throughout the history of the company, about 85% of its cash received was paid to early investors and executives. Overall, the company was losing money. Through SEC filing requirements, Groupon produced GAAP financial statements along with Adjusted Consolidated Segmented Operating Income (ACSOI) statements. ACSOI was used to demonstrate a proactive view of the company rather that its current state, as it excluded online marketing expenses, stock-based compensation, and acquisition expenses. This was reasoned since high acquisition costs related to desired growth would be significantly reduced in future years. Groupon’s initial S-1 states that their use of non-GAAP financial measures “ should not be relied upon to the exclusion of GAAP financial measures.” However, the document also states that ACSOI is an “important measure for the performance of our business” and should be considered. These non-GAAP filings are often misleading for investors as they put the company in an unrealistic light.
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  • Fall '19
  • Finance, company public

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