The reasons to be skeptical of Groupon are well documented. Not that it's a bad business, by any means, it's just that it's an industry with low barriers to entry and many competitors, and Groupon's early success is unsustainable since it was built on persuading businesses to offer ridiculously good deals which are likely to lose them money; businesses are wising up to this, deals are getting worse, people are getting less interested, and in general the whole social-coupon industry seems to be settling into a new equilibrium in which a $10^10 valuation for Groupon seems excessive.
You need to be very good at signing up businesses and getting good terms for your company to succeed. In addition, you need to figure out how to get a stable base of customers of your site.
Basically, Groupon clones have very low technical barriers to entry, but if you don't have a really good sales and marketing staff you're in trouble.
On the flipside, their customers (merchants) are reporting that they do not see the conversion rates that Groupon advertises to lure them into a deal. In response, they try things like raise their prices prior to honoring a deal, which further dilutes the value of Groupon's product.
It isn't a lack of business accumen, divesting yourself of a business at the height of it's market cap is the right thing to do. The problem is that in order to do sell at the highest price you need to convince someone else that the business will be worth even more in the future. For being able to do that he is a brilliant business man.
If pouring cash into this business would make it profitable then why did 90% of their Series G go to cashing people out? It seems to me that if Andrew Mason believed what he says then he'd go all in and take a modest profit to secure himself for the rest of his life. Instead he sees what everyone else sees which is a business about to tank.
Taking 'like a billion dollars' in liquidity when your company is bleeding cash does not engender me to believing that the management team sees long term viability in the company.
Groupon is built to flip, if you're a trader a stock like groupon is perfect, there will be lots of volatility to trade on. I'm not a trader, I believe in creating long term value. Groupon might be the kind of thing where a guy like Buffett could take advantage of the cash flows it generates to build a bigger better Berkshire.
http://www.youtube.com/watch?v=5ydqjqZ_3oc
This is fundamentally the best explanation of the groupon business model.