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by btilly 4861 days ago
Nobody is debating whether LivingSocial has a world of problems.

We're debating the veracity of all of the non-public details that made your report interesting. Well, in theory we are. Only one side of the debate seems to have showed up.
1 comments
PrivCoTeam 4861 days ago
CNN/Fortune story just updated again to say insiders confirm that LivingSocial was down to JUST $28M IN CASH in February right before taking yesterday's financing.

Do the math: looking at their 2012 financials on PrivCo: http://www.privco.com/livingsocial-receives-emergency-110m-c...

That is, LivingSocial's operating expenses are about $1.4 Billion/year (Revenue + Operating loss = about $1.4 Billion they spend a year). That's $120 Million a month of expenses. $4 million a day. MEANING NEW FORTUNE/CNN UPDATE to their story confirms LIVINGSOCIAL WAS DOWN TO JUST 7 DAYS OF CASH! How is that NOT the very definition of a "distressed financing" situation? Correct the record CNN and Fortune - shame on you - and admit when you're wrong - (and by the way they just deleted this posting from the article comments). LivingSocial was down to a dangerously low level of cash just as PrivCo's sources confirmed, only a week, maybe 2, left, before paychecks would start bouncing and the whole house of cards came down. This is the very definition of a "distressed financing."

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btilly 4861 days ago
Take out the $600 million non-cash "goodwill" item they wrote down, and you've got $800 million per year operating expenses. That ups them to nearly 2 weeks.

But they have been trying to get profitable. So they have been cutting expenses and adding revenue. This deal would not be possible without that. Therefore they likely are not losing money as fast as in 2012. So a month or more of runway is perfectly believable.

Next, expenses and revenue tend to come in on different schedules. If that is cash right after you've paid employees, and you have revenue booked but not realized yet, you're in a much better position than if those two are reversed. That could easily add another month.

The result? I suspect CEO's claim of "several months" is possible, but likely optimistic. However I would be shocked if your "7 days" is in the right ballpark. But there is an easy way to check. If you're right, they should have run through this investment inside of 2 months, 3 months tops.

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