INVESTMENTS

12 Months Ended

Dec. 31, 2019

Schedule of Equity Method Investments [Abstract]

INVESTMENTS

INVESTMENTS

The following table summarizes investments as of December 31, 2019 and 2018 (dollars in thousands):

	December 31, 2019		Percent Ownership of Voting Stock			December 31, 2018		Percent Ownership of Voting Stock
Available-for-sale securities - redeemable preferred shares	$	—	19%	to	25%	$	10,340	19%	to	25%
Fair value option investments	1,405		10%	to	19%	73,902		10%	to	19%
Other equity investments	75,171		1%	to	19%	24,273		1%	to	19%
Total investments	$	76,576				$	108,515

Available-for-Sale Securities

The following table summarizes amortized cost, gross unrealized gain (loss) and fair value of redeemable preferred shares as of December 31, 2019 and 2018 (in thousands):

	December 31,
	2019		2018
Amortized cost	$	—	$	9,961
Gross unrealized gain (loss) in Accumulated other comprehensive income (loss)	—		379
Fair value	$	—	$	10,340

We recorded $10.0 million, $5.6 million and $2.9 million of impairments of available-for-sale securities for the years ended December 31, 2019, 2018 and 2017 due to declines in the financial performance of the investee. Those impairments are classified within Other income (expense), net on the consolidated statements of operations.

In September 2018, we sold an available-for-sale security for total consideration of $8.6 million, which approximated its carrying amount and amortized cost as of the closing date.

Fair Value Option Investments    

In connection with the dispositions of controlling stakes in Ticket Monster, an entity based in the Republic of Korea, and Groupon India in prior periods, we obtained minority investments in Monster Holdings LP ("Monster LP") and in Nearbuy Pte Ltd. ("Nearbuy"). We have made an irrevocable election to account for both of those investments at fair value with changes in fair value reported in earnings. We elected to apply fair value accounting to those investments because we believe that fair value is the most relevant measurement attribute for those investments, as well as to reduce operational and accounting complexity. Our election to apply fair value accounting to those investments has and may continue to cause fluctuations in our earnings from period to period.

We determined that the fair value of our investments in Monster LP and Nearbuy was $0.0 million and $1.4 million as of December 31, 2019, and $69.4 million and $4.5 million as of December 31, 2018. The following table summarizes gains and losses due to changes in fair value of those investments for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	Year Ended December 31,
	2019			2018			2017
Monster LP	$	(69,408	)	$	(9,509	)	$	249
Nearbuy	(3,089		)	445			133
Total	$	(72,497	)	$	(9,064	)	$	382

Monster LP

In 2015, we completed the sale of a controlling stake in Ticket Monster to an investor group, whereby we contributed all of the issued and outstanding share capital of Ticket Monster to Monster LP in exchange for Class B units of Monster LP, a newly-formed limited partnership, and $285.0 million in cash consideration. In February 2017, we participated in a recapitalization transaction with Monster LP whereby it exchanged all of its Class B units for

16,609,195 newly issued Class A-1 units. Upon closing of the transaction, we own 57% of the outstanding Class A-1 units, which represents 9% of the total outstanding partnership units.

Following the February 2017 recapitalization transaction, the Class A-1 units are entitled to an $150.0 million liquidation preference, including an $85.0 million liquidation preference attributable to the Class A-1 units held by us, which must be paid prior to any distributions to the holders of the Class A-2, Class B and Class C units. Class A-1 unit holders are also entitled to share in distributions between $950.0 million and $1,494.0 million in accordance with the terms of Monster LP's distribution waterfall and in distributions in excess of $1,494.0 million based on their pro rata ownership of total outstanding partnership units. As a result of the February 2017 recapitalization transaction, we currently hold an investment in the most senior equity units in Monster LP’s capital structure. However, while providing more downside protection, those Class A-1 units provide less opportunity for appreciation than the Class B units previously held by us.

During the first quarter of 2019, we recognized a $41.5 million loss from changes in the fair value of our investment in Monster LP due to the revised cash flow projections provided by TMON in March 2019 and an increase in the discount rate applied to those forecasts, which increased to 26.0% as of March 31, 2019, as compared with 21.0% as of December 31, 2018. The increase in the discount rate applied as of March 31, 2019 was due to the deterioration in the financial condition of TMON and the competitive environment in the Korean e-commerce industry, which resulted in an increase to financial projection risk. During the second quarter of 2019, we recognized an additional loss of $27.9 million from changes in the fair value of our investment in Monster LP due to revised financial projections provided by TMON in June 2019. The revisions to the financial projections were made as a result of TMON’s continued underperformance as compared with prior projections along with adjustments to their business model.

The following tables summarize the condensed financial information for Monster LP as of December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	Year Ended December 31,
	2019			2018			2017
Revenue	$	569,869		$	416,042		$	280,612
Gross profit	43,416			27,838			37,773
Loss before income taxes	(105,212		)	(132,276		)	(124,873		)
Net loss	(105,212		)	(132,276		)	(124,873		)

	December 31,
	2019		2018
Current assets	$	73,598	$	85,844
Non-current assets	436,809		482,505
Current liabilities	430,592		432,133
Non-current liabilities	150,118		78,434

Nearbuy

In 2015, Groupon India completed an equity financing transaction with a third-party investor that obtained a majority voting interest in the entity, whereby (a) the investor contributed $17.0 million in cash to Nearbuy, a newly formed Singapore-based entity, in exchange for Series A Preference Shares and (b) we contributed the shares of Groupon India to Nearbuy in exchange for seed preference shares of Nearbuy. In January 2017, Nearbuy issued additional Series A Preference Shares to its controlling investor for total proceeds of $3.0 million. Upon closing of that transaction, the Series A Preference Shares are entitled to a $20.0 million liquidation preference, which must be paid prior to any distributions to other equity holders. In December 2017, Nearbuy sold its subsidiary Nearbuy India Pte Ltd., which represented substantially all of its business operations, to a third-party investor in exchange for a minority investment in the acquirer. During the fourth quarter of 2019, we recognized a $3.1 million loss from changes in the fair value of our investment in Nearbuy due to the revised cash flow projections provided in December 2019.

The following tables summarize the condensed financial information for Nearbuy as of December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	Year Ended December 31,
	2019			2018			2017
Revenue	$	5,507		$	6,016		$	3,839
Gross profit	4,944			5,857			3,405
Income (loss) before income taxes (1)	(1,777		)	(13,594		)	15,122
Net income (loss) (1)	(1,777		)	(13,594		)	15,122

	December 31,
	2019		2018
Current assets	$	3,611	$	5,286
Non-current assets	40,083		46,940
Current liabilities	4,966		4,015
Non-current liabilities	1,268		144

(1) Nearbuy's income before income taxes and net income for the year ended December 31, 2017 includes a $22.6 million gain from the sale of its subsidiary Nearbuy India Pte Ltd.

Other Equity Investments

Other equity investments represent equity investments without readily determinable fair values. Upon our adoption of ASU 2016-01 on January 1, 2018, we have elected to record equity investments without readily determinable fair values at cost adjusted for observable price changes and impairments.

The following table summarizes other equity investment activity for the years ended December 31, 2019 and 2018 (in thousands):

Balance as of December 31, 2017	$	25,438
Transfer to other equity investment upon conversion of convertible debt security	4,008
Impairment of investment included in earnings	(4,574		)
Foreign currency translation	(599		)
Balance as of December 31, 2018	$	24,273
Upward adjustments for observable price changes	51,397
Dispositions	(640		)
Foreign currency translation	141
Balance as of December 31, 2019	$	75,171

We adjusted the carrying value of an other equity investment due to observable price changes in orderly transactions that occurred during the fourth quarter of 2019, which resulted in an unrealized gain of $51.4 million. That gain is included within Other income (expense), net on the consolidated statements of operations for the year ended December 31, 2019. During the fourth quarter of 2019, we also identified buyers for 50% of our shares in that investment for an agreed-upon purchase price of $34.0 million which approximated the cost adjusted for observable price changes as of December 31, 2019. Refer to Note 23, Subsequent Events, for additional information on the closing of that sale in January 2020.

In July 2017, we sold an other equity investment for total cash consideration of $16.0 million. We recognized a pretax gain on the disposition of $7.6 million, which is classified within Other income (expense), net on the consolidated statement of operations.

In March 2017, in connection with the disposition of Groupon Israel, we retained a minority investment in the entity. The investment was recorded at its $0.4 million fair value at initial recognition and is accounted for as an other equity investment.