After reports of “accounting errors” surfaced, the SEC has initated a review of Groupon’s financial results that were posted after the company went public.
Jordan Rohan, senior analyst at Stifel Nicolaus, projects that the company could be facing a rough road forward.
“This is a business model where [the company] is making it up or proceeding along a plan as we are following them as a public company. [I am concerned] that if the addressable market isn’t as big as they say it was, we will find that out in an unglamorous fashion over the next few years.”
Additionally, reDesign principle analyst Rakesh Agrawal believes the problem lies within Groupon’s business model, which he calls “fundamentally flawed.”
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Maxim: Wherever profits abound ruinous competition will arise.
Update April 17: Here's a new local player...Facebook!