Gropon filed paperwork to go public (IPO) on June 2, 2011. That’s 24 hours after Google released ‘Offers’ service in Portland, Oregon. Most likely a coincidence but important to mention because it matters in terms of competition; just one of the reasons Groupon IPO is a bad deal.

Here are the 10 Reasons Why Groupon IPO is a Bad Deal

1. Groupon paid out dividends to its preferred stockholders even though it lost money during the same time from operations. (source)

2. During every round of funding, Groupon paid off employees, owners and investors. (source)

3. Groupon is not profitable and will not be able to turn profit anytime soon. (source)

4. Groupon spent more money marketing than making money from operations. (source)

5. Groupon executives have already cashed out. (source)

6. There are low barriers to entry – thus eroding profit margins. (source)

7. Groupon’s revenue is grossly exaggerated. (source)

8. Groupon is technically insolvent. (source)

9. Groupon is currently being operated as a pyramid/ponzi scheme; they need the influx of cash to pay advertisers who offer deals. (source)

10. Groupon is using too many accounting gimmicks that don’t conform to Generally Accepted Accounting Principles (GAAP). (source)

I avoided numbers in my 10 reasons because they are misleading and sometimes downplay simple facts. The sources I mention do have numbers if you want to see them. As an I accountant, I see a lot of numbers and know for a fact that numbers are sometimes best communicated in the form of direct statements.

Some recommended reading:

Is Groupon’s Business Model Sustainable?
Funny or Die: Groupon’s Fate Hinges on Words
Using Groupon ‘Worst Decision I Have Ever Made,’ Says Merchant