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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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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.
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
In a sane world, Share price is a function of revenues. Cash flow and profitability should determine stock price.
There, I fixed that for you.
they only floated 5% of the company shares. principals all had a nice ejection seat. the stock price goes up on the first day because everyone wanted to borrow it so they could short it. the IPO underwriters make a fee on the offering, the principals cash out, some early bird flippers turn a profit on people looking to supply the borrow or cover their shorts, and they exit too. who's left? the market bagholders who get excited about 'new technology booms' from watching CNBC over their orange juice. it's basically a ponzi scheme. I hope they drown in it.
Speak for yourself.
Groupon is dumping VC money directly to the founder's pockets and screwing the businesses that participate. That combination will result in failure.
it's basically a ponzi scheme.
Nope, not even close.
The situation is analogous to "begs the question". "begs the question" has a technical very specific philosophical meaning but in modern prose it almost exclusively means "Insert wordy semi-scholastic filler phrase here". Also see "price point" instead of "price", etc etc. Hell, see "etc" too.
In modern American speech, "ponzi scheme" is a semi-scholastic phrase meaning "it sucks" or "I don't like it" or "they're crooks". It does have a real technical meaning and describes a criminal activity which has nothing at all to do with your explanation in any form. Ironically (irony is another often re-imagined word) their sales/finance strategy is vaguely ponzi like, in the sense that all corporate sales/finance strategies are when they reinvest any profits in the company, but not really, not in a criminal sense anyway, and certainly not in the market explanation you provided.
I can't think of a way to run a ponzi in/over/with a market like you describe... maybe a boiler room operation cooperating with false price quotes could pull it off?
Note that I'm not defending them; they appear based on lots of journalist stories to have published fraudulent financial data. That would make them frauds, not ponzi operators. I'm just saying it does no one on either side, any good, to describe a bank robber as a kidnapper, or describe a horse thief as a murderer.
"Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
I stopped reading at your last comment because the fixed width font hurts my eyes.
> 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.