* Groupon to wait before launching roadshow -- sources
* Joins Zynga, others in postponing market debuts
* Also faces regulatory and investor questions
(Adds Zynga IPO delay, details on industry, second source)
By Alistair Barr
SAN FRANCISCO, Sept 6 Groupon has put its IPO
on hold for at least a few weeks, hoping to ride out global
market turmoil while dealing with regulatory questions
surrounding its highly anticipated public float, two sources
with knowledge of the deal said.
The daily deal company, which had intended to launch into
the final phase of its initial public offering in mid- to late
September, joins Zynga and other would-be market debutantes
that have postponed flotations as the dismal outlook for
developed economies hammers stock markets.
Since Groupon filed for a $750 million IPO in June, some on
Wall Street have also questioned Groupon's financial
disclosures, including its use of a metric that excludes
marketing and other expenses from profit calculations. Others
fear the company's growth is slowing in North America.
To hit an unofficial deadline to debut this month, the
company would have had to launch a roadshow to attract
potential investors this week or next.
The Wall Street Journal reported earlier on Tuesday that
Groupon had scheduled a roadshow for next week but has called
that off now.
The company is not canceling its IPO, but is reassessing
the timing of an offering on a week-by-week basis, the sources
said on condition of anonymity because the IPO process is not
Groupon Chief Executive Andrew Mason drew fire after the
leak of an August memo to employees that lashed out at the
daily deal site's critics. In the internal memo, Mason also
talked about August revenue growth and reaffirmed his
confidence in the business. [ID:nN1E77O22B]
The company has received questions from the Securities and
Exchange Commission about the memo, according to the Wall
Street Journal which cited unidentified sources. Regulations
limit what companies can say ahead of a planned IPO.
A Groupon spokesman declined to comment.
Groupon is among a clutch of Internet companies heading
toward an IPO this year or next, including social games maker
Zynga and Facebook, the world's largest social network.
Apart from questions on disclosure, investors worry also
about the underlying profitability of Groupon's business of
sending out coupons online that offer big discounts on local
products and services.
Its IPO filing in June revealed a company growing quickly,
but losing a lot of money. Marketing spending on new
subscribers has been a big source of those losses and some
analysts worry that Groupon may have to keep spending heavily
to attract and retain customers.
Mason has argued that subscriber-acquisition costs would
dwindle over time because once a customer signs on, he or she
can be maintained through simple email alerts.
The largest daily deal company wants to slash that cost to
zero in less than three years, two people familiar with the
company said last week. [ID:nN1E77U1OU]
The daily deals industry that Groupon helped create has
also been experiencing growing pains recently.
Facebook ended its Deals business after only four months,
while Yelp's chief executive said this week that some types of
popular local businesses think daily deals are "uneconomic,"
raising questions about the sustainability of the model.
(Additional reporting by Clare Baldwin in New York; editing
by Andre Grenon and Tim Dobbyn)