It seems like one of the biggest deals recently is websites or social type companies raising money through IPO, or stocks. Yes, there are already stocks of Groupon but they are more of a private stock. Thinking it may be a great idea to gobble up some shares of GRPN? You may want to be careful, as Groupon may be very far from profitability. The company made $714 Million last year, way up from $30.5 million the year before. The problem is even with that great of an increase in revenue Groupon reported losing $389 million last year alone. How does that happen when profits grow that much in a year? Well, growing pains, debt and repaying stockholders to start. Even back in Jan the company raised $950 million privately and it has already pretty much tapped that out. Most of it went to paying back shareholders and the company which sold Groupon to the current owners. It may take a little while for the rapidly growing company to make a lot, so consider it a long term investment. With the likes of facebook and google jumping into the coupon style mix, its only going to get harder to sustain a profit.
Category: Tech News
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