Groupon recently reported its operating income for 2011 to be $22.6 million less than it had previously cited due to a “shift in the company’s fourth quarter deal mix” and other factors. At $492.2 million, the company actually made $14.3 million less in the fourth quarter of 2011 than the $560.5 million it reported at the time.
Who forgot to carry the one? In its SEC filing, Groupon blamed the discrepenacy on “an increase to the Company’s refund reserve accrual to reflect a shift in the Company’s fourth quarter deal mix and higher price point offers, which have higher refund rates.”
Whatever that means in lawyer speak, it’s meaning on Wall St. was clear enough. With a nod to impeccable timing, the company didn’t issue its statement on the correction until markets had already closed, but the company’s stock slipped to $18.38 by the time Manhattan headed to cocktail hour at the of the end of a busy Friday, well below Groupon’s $20 share price of its IPO last October.
Once pegged to be the IPO of the year, Groupon has fallen off its perch with many pointing to its very existence as solid evidence for a growing tech bubble. Once touted to be the highest IPO of the year, the company’s valuation has since been reduced in half as its growth has slowed and investors increasingly question its business strategy.
Yet the company sticks to its guns, promising to correct its math.
“We remain confident in the fundamentals of our business, as our performance continues to highlight the value that we provide to customers and merchants,” said Jason Child, Groupon CFO, said in a press release regarding the error.