Latest issue brought to the fore: profitability

When a company goes through the IPO process, it needs to make various amendments to its initial filing (which is known as the prospectus or S-1). Often, the changes are fairly technical. For Groupon, these amendments often are bombshells.

For example, in late June, Groupon indicated that the Securities and Exchange Commission required that the company change its accounting for its revenue recognition. It could include only the commission on a groupon, not the total value of the voucher. So for 2011, revenues were $688.1 million, not the juicy figure of $1.52 billion.

Such things can be a buzzkill for IPO investors — especially in today��s jittery markets. In fact, it looks like the value of Groupon might be as low as $3 billion now. That’s after it reached a whopping $24 billion estimate earlier in the year.

Will Groupon change its crazy ways? Perhaps. In its most recent amendment, the company actually showed some realism. Groupon said it will — at some point — ��significantly�� reduce its marketing expenditures, without impacting its overall business.

This definitely is encouraging news. Consider that for the first six months of 2011, the marketing expenditures came to a whopping $345.1 million, compared to $241.5 million for all of 2010. So by bringing these down, Groupon hopefully should get much closer to profitability, which is a reasonable goal. Hey, other top IPOs, such as Google (NASDAQ:GOOG) and Salesforce.com (NYSE:CRM), were able to do this, right?

But the big question is: When will Groupon cut back on things? As of now, we’re in the dark. Groupon’s merely stating a fuzzy goal. So — ironically enough — Groupon just gave investors some! thing el se to worry about. “Will Groupon ever be a profitable company?” And without an answer to that question, Groupon’s IPO will be even more difficult to make a reality.

Tom Taulli is the author of ��All About Short Selling�� and ��All About Commodities.�� You can also find him at Twitter account @ttaulli. He does not own a position in any of the stocks named here.