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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.
How does a company with a lack of value go on the stock market, IPO and expect there value to go up? This is the big world of money, show me the money!
If 50,000 people each agree to buy 10 shares of AAPL, Apple will give them the stock for 20 percent off and then give half the proceeds to Groupon?
Nah, I don't think they'd go for that.
Can we just go ahead and take that 6 billion you offered earlier and call it squaresies?
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.
50% off, limited time only!
blindly antisocialist = antisocial
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
Groupon is dumping VC money directly to the founder's pockets and screwing the businesses that participate. That combination will result in failure.
How does groupon work?
Company A has a product that normally sells for X. They get a deal with groupon to sell it for Y, such that Y < X.
Groupon take some cut, so the retailer is getting A, such that A<Y<X.
So I call the retailer and go 'hey, let me buy your thing at price B', such that: A<B<Y<X.
The retailer gets more than they would from groupon. I pay less than I would if I'd gone through groupon. Groupon get zilch. I win, the retailer wins. My only issue is how I pitch the price B. But for me, anything below Y is a win for both of us, I just don't know what A is (if I go below that, the retailer is better off with groupon).
Or I've missed something, apart from the fact that if groupon didnt exist I wouldn't have heard about the retailer in the first place...
They have admitted in their filings that they are using the float from both the income from new sales, as well as the hold-backs on the money they owe merchants (they can take 3 to 4 months to pay out) to support their business.
They don't have any profits once they pay their sales reps and the merchants they owe money to - they've also failed to put aside the money from unused groupons - most consumers don't know that in many states they can claim a refund from groupon up to 5 years later for unused tickets.
First attorney-general who goes after them sinks them.
The company, however, still pushes the idea that it's profitable, even though the only people making profit seem to be the main owners of the company who are basically trying to sell a product that too few people want. Add to the fact that they've hyped the crap out of their initial offerings over and over again, only to pull it back before release, and people now see Groupon as what looks like a scam (even if it's not). So, it's stock is going to come out, go up really fast with the people who seem to think an initial offering is a gold mine, and then tank before disappearing forever.
Sarbonn's blog: http://www.sarbonn.com/blog
Groupon CEO regrets selling stock via groupons "I had no idea that selling something for 1/4 its normal price was such a shitty idea. Who in their right mind would ever use this to sell anything?"
Facebook is the next company in trouble. Their Alexa reach peaked six months ago, before Google+ launched. That means Facebook is no longer a growth company, and they have to be valued strictly on profits, less their future potential for decline. They didn't IPO on the way up. Now it's too late for an inflated valuation.
Facebook's real financial figures aren't known. They haven't had to make the reports to the SEC that a public company has to make. Groupon (and AOL before them) inflated their profits by capitalizing and depreciating things they should have expensed. (AOL tried to account for those free AOL disks as capital expenses. That got them in trouble when it was noticed.)
On top of that, social networks have a limited life. AOL was once the leading social network. Remember Geocities? Orkut? Friendster? Yahoo 360? Myspace? Once the downward slide of a social network starts, it doesn't seem to stop.
Social networks also have a fundamental problem with advertising - it's an annoyance. Relevant ads that appear with search results are both useful for users and profitable for advertisers. Ads on social networks, where you go to connect with your friends, just get in the way. Social networks try to compensate for this by adding more and more ads. That killed Myspace, and Facebook seems to be on track to go the same way.
But Facebook has to IPO. They have to pay off the early-stage investors. This isn't going to be pretty.