for yourself on CNBC:
And the transcript:
this is a company that essentially has a liquidity and funding crisis that it needs to address short-term. and really, the last thing you want to file an ipo for is to try to serve a short-term funding need. i think we learned from solyndra last year that ipo is not a short-term funding solution. so what are the red flags you've seen that lead you to this conclusion?
we cover private companies all the time and look at ipo filings every day. i can't remember the last time since solyndra i've seen this many red flags at a private company ipo filing. we have business deterioration, all the numbers are going the absolute wrong direction.
number two we have insiders that have already massively cashed out that essentially don't have their skin in the game anymore.
as far as business deterioration, sorry, number three, clearly the balance sheet shows this company is technically insolvent and has an eminent financing need. if we move on to the next screen, we'll see as far as the business metrics deteriorating i think can be represented by the fact that yes, the company is growing registered users dramatically, but you can see the actual spending per user has fallen off the cliff.
the s.e.c. has required -- this is the first time i've seen the s.e.c. require a company that slashes revenue less than half. essentially, groupon was recognizing the entire amount sold to consumers as revenue. and the s.e.c. made them just take their 40% cut as revenue.
so literally, within a matter of a couple of weeks, half their revenue vanished. every time this company amends its ipo, it looks worse.
sam, i haven't read the amendments, but when you talk about insiders, are the insiders not selling any stock? they're out completely already? they're not out completely. but this company has raised $1.1 billion in venture capital that is a lot of venture capital for a private company to raise. and they raised that in january. what the ipo filing revealed is that of the $1.1 billion they've raised, they've spent $940 million of to it cash out insiders. and that's unheard of to have 84% of a company's venture capital funding go right out the door in just 16% to a company. a company that is losing money and needs the cash.
H/T to my friend Mr. H. for the link.