A stark IPO reality check (chart from BusinessWeek)
There will be a lot of noise about the momentum of Groupon's stock in the 24-hour window of its public offering, but the pop lasts a day (or in LinkedIn's case, a few days). The reality sets in over time. And the reality is that Groupon, once the fastest growing company in the American history, still shows no signs of profitability. Small businesses have publicly fired back at online deals. The firm's accounting, which for a time excluded marketing costs, has been likened to a fairy tale. The company's claim that its business model will benefit from network effects runs up against the fact that its value has been decreasing as it gains more users. One of its oldest markets, Boston, is showing signs of deterioration.