Groupon (NASDAQ: GRPN) didn’t announce any financial details when it acquired onetime rival LivingSocial back in October, other than to classify the purchase as “not material” to 3Q earnings. Groupon’s 4Q earnings report, however, has revealed that “no consideration was paid” to take over LivingSocial. Once valued at north of $5 billion, LivingSocial is apparently now worth nothing at all.
That isn’t the preferred outcome for the coupon company’s investors, to say the least. Founded in 2007, LivingSocial had raised more than $1 billion in VC funding from backers including Lightspeed Venture Partners and Revolution Ventures. That includes a $176 million capital injection in 2011 that valued the company at $5.37 billion. Groupon, meanwhile, was backed by a host of VCs before going public in 2011.
Seth Klarman: Investors Can No Longer Rely On Mean Reversion
"For most of the last century," Seth Klarman noted in his second-quarter letter to Baupost's investors, "a reasonable approach to assessing a company's future prospects was to expect mean reversion." He went on to explain that fluctuations in business performance were largely cyclical, and investors could profit from this buying low and selling high. Also Read More
Article by PitchBook