Groupon’s $750 million IPO announcement this week unveiled a lot of details about the company, and some of the details were surprising. The Wall Street Journal reports “it has been racking up huge losses, and such Internet powerhouses as Google Inc. and Facebook Inc. are moving to enter its business.” The story adds that Groupon lost hundreds of millions of dollars last year and the first quarter of this year combined.
Will they reflect badly on the daily-deal leader, from a public relations standpoint?
Probably not any worse than its Superbowl ad gaffe, when sarcastic references to Tibet and Darfur failed and the company came off looking callous and offensive.
Information about Groupon shows both good and bad about the company at this point. Experts are already saying Groupon is “anti-Silicon Valley” for daring to establish its headquarters in Chicago. And it turned down an offer last year to sell to the almighty Google. So that may quell some fears about a bubble.
Then there is the matter of its operating expenses. It has more than 7,000 employees, which is not the lean way Silicon Valley companies like to run, and enormous overhead, including $179 million in online marketing in the first quarter of 2011. But that WSJ story quotes one analyst who says that the company has “few fixed costs and can easily cut expenses by firing employees.” And recent revenue numbers are moving in a positive direction.