Online coupon site Groupon is about to have a high-profile IPO this week and while these are traditionally over subscribed, analyst outfit Barrons suggest it is better off avoided.
It said that the deals and coupon website operator has an unproven earnings record and slow growth.
This will be news to Groupon which is so confident that it will make a killing on its public offering that it is considering raising the price range for shares in a bid to cash in on shareholder interest. Groupon seems to think that it can raise its value to about $10 billion.
Barrons points out that there are loads of things which could go wrong for the outfit. Groupon does not make much cash and its growth is slowing. Meanwhile it faces challenges from competitors including Google and Facebook.
Barrons warned that any price gain would have less to do with the company’s strategic plan than its strategy to milk its IPO for all it’s worth.
It said that a a $10 billion market value is a lot for a company with no profits and an unproven business model and this IPO is one deal to avoid.