Why Wall Street wanted Groupon to sack Andrew Mason

Earlier this week, Groupon CEO Andrew Mason openly confirmed rumors that his job was in jeopardy. After securing the temporary approbation of his board yesterday, Mason is now facing ridicule from a more vocal critic: a public market that would prefer to see him pushed aside. But why?

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“It would be weird if the board wasn’t discussing whether I was the right guy for the job,” Mason said Wednesday during an interview at the Business Insider Ignition conference.

The always quotable Mason pointed to the fact that his company’s stock is down 80 percent as reason enough for the board to rightfully question his credentials, as AllThingsD’s Kara Swisher said was the case.

“If I ever felt that I wasn’t the right person to do the job, I’d fire myself,” Mason added.

That honesty, or the actual possibility of his departure, seemed to win Mason’s Groupon a little love from Wall Street — but it was the kind of fickle love found in most tumultuous relationships.

After yesterday’s Groupon board meeting, company spokesman Paul Taffee confirmed Mason would remain as CEO. “The board and the management team are focused on the performance of the company and they are all working together with heads down to achieve Groupon’s objectives,” Taffe said in a statement.

And then Wall Street’s love was lost. News that Mason was keeping his post wasn’t well received by investors betting on his departure. Groupon’s stock slid backward 8 percent to $4.19 in trading today.

What’s Wall Street’s beef with Mason, exactly?

“I think … it’s the fast money that bought the stock over the past few days, speculating that maybe [Mason] would be stepping down. When that didn’t come to fruition … that same money is coming out of the stock,” Sterne Agee analyst Arvind Bhatia told VentureBeat in a conversation today.

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But the downturn has little to do with long-term investor confidence in Mason as CEO. Short-term investors were seeking quick returns. They were anticipating that Mason would be kicked to the curb, a new CEO would be appointed, and the new leader would bring a stock pop — just as Yahoo’s stock climbed when Marissa Mayer was named CEO. Mason is staying, so these fickle investors took their money out.

Bhatia said that he personally believes Mason is the man for the job — at least for right now.

“He comes across to me as a very straightforward guy … and I think he is evolving. I think the stock coming down is a factor of multiple things, some in his control, some not so much. I’m willing to give him and the company the benefit of the doubt … to see if they can evolve.”

Despite record-setting holiday sales weekend for Groupon, Mason and company still have to prove that Groupon is even worth four bucks. The stock was buoyed last week when Tiger Global Management disclosed it had bought 65 million shares, close to 10 percent of the company. The boost amounts to speculation that Groupon can, in theory, turn things around, Bhatia said.

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“Fundamentally, I don’t know if things have changed that much,” he cautioned. “At least publicly, there hasn’t been anything that dramatically different in their trends to justify that kind of a move this quickly.”

A report issued Friday from Evercore Partners concludes as much by reiterating a $3 price target and an underweight rating, which amounts to a recommendation to sell.

Mason may be keeping his job, but he’s certainly not in an enviable position.

Photo credit: DEMO/Flickr

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