Investors support the firing of Groupon’s Mason. But is it enough to start a turnaround?
The firing of Groupon founder and CEO Andrew Mason has apparently made investors happy. The stock price closed up over 12.5 percent today, another sign that the market had lost confidence in Mason. Investors, which have sold the stock in massive quantities and driven its stock down more than 8 percent since its IPO peak, may welcome this decision, but it’s not enough to ensure the company a path to long-term profitability and growth. The company’s most recent earnings report indicates that gross margins were shrinking instead of growing and generated a quarter loss of $81 million when analysts expected a small profit. While investors have doubts about the CEO, he won’t be the only executive to leave.
Many of the company’s most talented executives will likely leave the company soon. They joined expecting to join a Google-like rocketship that would generate massive fortunes, but instead have been left with a dud. Stock options issued to executives that were tied to the IPO price are worthless. The stock price would have to increase tenfold to offer executives a return worth the risk. Once a new CEO is named, they will likely eliminate more executives as they bring in their own team. All this change in headcount over a short period of time could cause significant problems if it isn’t managed properly.
Who is Mike Periu?
Mike Periu is the President of Proximo, LLC, a company that markets education and training programs to small business owners, entrepreneurs and consumers.
Mike Periu has been interviewed over 500 times for broadcasters including CNN, NBC TVE, RTE and others. Mike is a contributing author to OpenForum, Yahoo! Finanzas and the Huffington Post.
Mike graduated from Georgetown University in Washington, DC. His degrees are in Finance and International Business. In addition to his work Mike is also on the Board of the Council for Economic Education.
