Comments on: How Groupon accounts for its deals

By: mark_kaskin

mark_kaskin — Wed, 04 Apr 2012 04:12:16 +0000

If Dr. Kressel were clever, he would have his friends and family buy all 240 coupons from Groupon, hold them until May 19th, then surrender them all for refunds. Kressel gets $65,000 from Groupon by May 18th, his friends and family get full refunds (and maybe a 10 percent tip from Kressel), Groupon is out $65,000, and Kressel has to perform zero procedures.

Sounds like it could be easy to scam $$$$ from Groupon.

By: louism2

louism2 — Tue, 03 Apr 2012 19:11:49 +0000

There is no danger in Groupon being too conservative with their reported revenue. There is however a huge danger in them being too optimistic.

Looks like they may have gotten stung by being too optimistic.

By: koumui

koumui — Tue, 03 Apr 2012 17:47:20 +0000

Revenue recognition is simple in theory but complicated in the real world.

By: TFF

TFF — Tue, 03 Apr 2012 17:00:14 +0000

Groupon is an obvious fraud with an unsustainable business model. It is designed to enrich its founders and its employees, working off the “greater fool” theory.

Aside from that, it is a terrific company. Go ahead and give them your life savings.

By: Curmudgeon

Curmudgeon — Tue, 03 Apr 2012 16:41:22 +0000

I don’t know accounting from anything, but I bet the commissions on those sales are paid pretty much up front, and without a way to claw them back in the event of returns. That encourages sales people to go after bigger and riskier deals – there’s no downside to them.

By: LadyGodiva

LadyGodiva — Tue, 03 Apr 2012 16:36:45 +0000

Am marginally acquainted with some Groupon execs. Most are very young vintage, males raised in very affluent community, eager to make first million. Last year another acquaintance was hired as COO, older and more experienced, from same town. We joked she was there to babysit the boys. But she left after a few months, clearly scared by what she saw. Keep that in mind whenever you read about Groupon. The babies are spoiled and unsupervised. What took the SEC so long?

By: QCIC

QCIC — Tue, 03 Apr 2012 16:32:13 +0000

There are huge amounts of money to be made by pushing revenues forward and costs back. It is one of the easiest ways for the “executives” to hit targets without actually improving anything. Why on earth the SEC and GAAP are so lax on that subject is beyond me.

By: Eericsonjr

Eericsonjr — Tue, 03 Apr 2012 16:20:27 +0000

Groupcon booked revenue before it had revenue? Whocuddaknowed?

By: AdrianBunk

AdrianBunk — Tue, 03 Apr 2012 15:57:12 +0000

“So there’s a case to be made that the company shouldn’t book any revenue at all until September, just to be on the safe side.”

Note that the “on the safe side” is not true for the prediction of the company’s profit.

Theoretically, all 240 coupons in the example could be returned after May 18, resulting in a loss of $60,000 for Groupon.