Groupon, Inc. (NASDAQ: GRPN) is a Web 2.0 (or is 3.0?) that is caught in what very well may be a no-win situation. Its CEO has so far proven to not be a good CEO. The company has competition that is only growing. It has no patent protection at all as far as we are concerned. And shares hit a new all-time low this morning.
If you are a shareholder you better realize one thing here. This is one of the 11 companies we recently featured (actually more than that in total) where shareholders have no power at all. Shareholders can be upset as much as they want, but if they cannot get “50% plus one vote” then they cannot effect any change. Could an activist investor like Carl Icahn or someone else force change here? No way. They could raise hell through SEC releases, the media, and press releases until the end of time. Co-founding CEO Andrew Mason and co-founding Chairman Eric Lefkofsky are in total control here due to control of the voting shares.
Do these guys care if the stock tanks? Probably not, even if they missed a chance to sell to Google Inc. (NASDAQ: GOOG) for more than it is worth right now.
Melissa Lee of CNBC asked this morning how long the CEO has to deliver results. That call was worthless because of the obvious: shareholders have no power. It is that simple. No more, no less. Shares have started to bounce after an analyst said positive things about the value of Groupon, but again it won’t matter unless the management team wants it to matter.
Investors are stuck with this management team at Groupon, at least until the team starts to turn against one another. Groupon shares hit a new post-IPO low of $7.25 this morning and the prior post-IPO range since the end of 2011 was $7.72 to $31.14 before today. At $7.89, Yahoo! Finance lists its market cap as being $4.98 billion.
JON C. OGG