Wall Street hates Groupon's CEO

The deal site's shares slide 8% after the board decides to keep embattled chief exec Andrew Mason.

By Jason Notte Nov 30, 2012 3:09PM

Groupon (GRPN) may be just fine with keeping embattled chief executive Andrew Mason, but Wall Street isn't nearly as happy about the decision.


Groupon's share price fell more than 8% Friday after the company revealed Thursday that it plans to keep Mason on board in the short term. It's been a tough week for Mason after Kara Swisher at All Things D received word Tuesday from "sources close to the situation" that several members of the deal site's board were thinking of showing him the door. That sent Groupon share prices soaring, and forced Mason to tell Business Insider in an interview on Tuesday that "it would be weird if the board wasn't discussing if I was the right guy for the job... If I ever thought I wasn't the right person for the job, I'd fire myself."

None of this hints at the next step for Groupon, which has seen its share price tumble from $20 after its initial public offering last November to around $4 on Friday. Groupon executives have fled the company in droves and the daily-deals site has laid off nearly 650 workers in the last six months as businesses as small as waffle shops complain about its business model and payment practices. Both merchants and consumers have soured on daily deals recently, with $566 million in losses at Groupon competitor LivingSocial last quarter dragging down parent company Amazon's (AMZN) earnings. Just this week, LivingSocial laid off 400 workers, or nearly 9% of its staff.Credit: Johannes Simon/Getty Images
Caption: Andrew Mason, CEO of Groupon


Mason, meanwhile, can't be feeling terribly comfortable. According to both Swisher and the Wall Street Journal, two of the board members pushing for his ouster were Mason's co-founder and Groupon executive chairman, Eric Lefkofsky and fellow co-founder Brad Keywell. Mason's role within the company was already being minimized after Groupon hired former Amazon exec Kal Raman as chief operations officer earlier this year to take over some of Mason's day-to-day tasks.


The chief executive hasn't made much of an argument for his recent reprieve, either. Mason's fratty demeanor and public fumbles raised questions about his experience and maturity, while his public statements left critics dumbfounded. When asked by CNN two years ago why he turned down a $3 billion buyout offer from Yahoo (YHOO) and $6 billion from Google (GOOG), he responded "I want to be part of GE or something like that." He caught flak for drinking beer at a Groupon meeting before telling the company it needed to grow up. In his Tuesday interview, Mason admitted to asking Groupon's chief financial officer what it would take for his company to go bankrupt.


That Groupon hasn't taken that route under his watch is a small miracle. Its stock price fell below $3 in early November before hedge fund and private equity firm Tiger Global Management stepped in and bought a 10% stake in the company. Still, Groupon's market cap has shrunk from $13 billion to less than $2 billion and its revenue per customer is off by more than $13 in the last year.


Mason may have survived the week, but Groupon's fate remains very much in doubt. While its Groupon Goods deals on individual items have been warmly received, the market seems to have no problem scolding Groupon when it feels the deal maker is heading in the wrong direction. For now, Groupon's getting a loud, harsh talking-to.


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