Don’t Mean To Be Alarmist, But Groupon Is Running Low On Cash

By Henry Blodget

One of the fastest-growing companies in the history of the world, Groupon, is now running seriously low on cash.

 

The company is not broke, by any means. It can also presumably raise additional capital in the private markets if its IPO gets further delayed.

But Groupon’s cash cushion relative to its liabilities is small–and the gap between the two is going the wrong way fast.

As of last quarter, Groupon was still cash-flow positive. If it remains that way until after the IPO, the cash situation won’t become critical. If the company stumbles, however, or the economy suddenly turns south, Groupon could get into serious trouble in a hurry.

Here are the details…

On the surface, things look great: As of June 30, Groupon had $225 million of cash. Despite losing $103 million in Q2, moreover, the company actually generated about $25 million of free cash flow in the quarter. So a cash crisis would seem to be the last thing the company needs to worry about.

But the devil–and danger–is in the details.

Read More

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