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Groupon Not Doing So Well On Wall Street
bdking writes "Shares of the daily-deals site were up Tuesday, but Groupon's ride on Wall Street since going public in early November has been almost all downhill. And there's no evident catalyst to reverse the slide."
From the looks of it, Groupon is blowing all of its money attempting to expand in the face of ever-growing competition in a market with trivial start-up costs.
It's simple: They IPO'd. They don't give a shit about their stock price; they have your money. An IPO is always a bad buy-in because they'll do everything in the world to inflate their stock price. The IPO brings cash to the business; then us traders trade little sheets of paper back and forth for some imaginary value, hoping that we can figure out when the value is going to stop going up and then distribute our papers to other idiots, then buy them back when the value is going to stop going down. In this way we get other paper (called money) in greater quantities than the little papers (called stock) that we're trading around.
Facebook will do this too. They'll IPO, you'll hear singing praises about how this is THE IPO you want to get on--it's friggin' Facebook. You'll see their stock price go up for a day or two after. Then down it comes. LNKD did the same thing.
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Share price is a function of revenues. Cash flow and profitability determine stock price.
Companies that do little to generate cash and profits don't deserve a high share price. Did the dot com boom teach us nothing?
They're starting to realize that Groupon customers don't translate into long-term customers, which makes the value of offering deals on Groupon very low.
of some 60 year old clueless investors with money to burn but not much web savvy, some 30 year old wall street sharks eager to pump a price and cash in on their cluelessness, and a bunch of 20 year olds rolling their eyes and going to pick up their cheap cupcakes?
because the story can't possibly be "promising tech company not so promising". so nobody learned anything from the dotcom crash 10 years ago? is it 2001 or 2011?
this story arc is completely and utterly predictable. clearly i'm not some wall street genius: i'm certain most people posting on this site saw this whole story arc coming too
so why the bleep is it still happening?!
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
$85 was the initial listing price, it was over $108 at the end of the day. As to how this happened, there's a few reasons. First, at the time nobody really knew what Google was worth, there was still some belief that their Search was worth more than their advertising, because their was a strong belief at the time that internet advertising wasn't worth that much. Which brings us to the second reason, which is that it was 2004, and the dot com bubble was still pretty fresh in peoples minds, and thus people were hesitant to get onboard with any internet company, regardless of how successful. But the real reason it's worked out well is because Google has been a successful, profitable company for the last 7 years, so their stock has continued to go up. If Groupon ever actually turns into a profitable company, people who bought in at $30 and are still holding those shares in 5-8 years will make a hell of a lot of money. It's the interim that's going to be ugly, and there's certainly no guarantee the company will even survive that long. But damn near any company, if you get in on the IPO and they stay profitable for an extended period of time, you will make money.
> The only thing that keeps them going is (1) the cash infusion from the IPO - otherwise they would have shut their doors by the end of the year, and (2) the money from current sales, which is used to pay off past sales - same as a Ponzi scheme.
The Groupon business model is lousy, their business have no intrinsic value, but all of this is clear to whoever wants to get a piece of the action. Buying Groupon stock might not be a sound investment, the IPO might be a mere financial tactic on their part to bring in money and cash out, but that does not make it a criminal activity.
Saying that the Groupon thing is a Ponzi scheme is like spitting in the face of Madoff's victims. Saying that teabaggers are fascists is making fun of the people who were tortured and killed in Mussolini's jails. Saying that my 55 years old neighbor who married a 19 year-old is a pedophile is disrespectful of those who had their 5 year-old abused by the bus driver. Saying that OWS is a revolution is an insult to the people who died to kick out dictators.
Words are important.
lucm, indeed.
That some Ponzi schemes make it to the stock market isn't news. After all, Madoff was a chairman of NASDAQ.
I heard that at one time he stopped to take a piss in a KFC in southern Alabama, so nobody will be surprised to learn that fast food chains are a Ponzi scheme. Also he was born in April, making him a Taurus, which clearly implies that Ford is a Ponzi scheme (this is why they did not need bailout money).
Seriously, this whole discussion and the bastardization of "Ponzi Scheme" reminds me of this episode in the Simpsons when Lisa goes to a girl school, and in the math class the teacher asks: "is the number 7 odd, or just different".
lucm, indeed.