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Groupon is Effectively Insolvent

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Re: Groupon is Effectively Insolvent

#51

Post by mynameishere »

dustingetz wrote: post #42
chailatte wrote: post #3

I doubt Groupon will bankrupt any of hacker news readers' portfolio; I bet most of them are licking their chops to short this thing (just like they are shorting LinkedIn). Effectively, all these IPO/overvaluation bubbles are meant to steal from (mostly public) pensions of older investors. So the next time you see your uncle or grandpa, buy them a nice bottle of wine! They're paying for your startup (while losing thei…

quoted from http://shortlogic.tumblr.com/post/5834390772/right-now-our-d... : "Right now our desk is seeing something they’ve never seen before. It currently costs roughly 100% annualized to short LNKD. So put in monthly terms, if you borrowed $20,000 of LNKD to short, each month you would have to pay an 8.3% borrowing charge (100% / 12 months = 8.3%) or $1667 per month. That is absolutely unreal. Of course this char…

There are no shares to borrow that I can find. The options are so expensive I'm tempted to buy some shares. You can make 4 percent writing june calls (15 days). Annualize that.

Re: Groupon is Effectively Insolvent

#52

Post by jimbobimbo »

Cherian_Abraham wrote: post #5

I found this link ( http://allthingsd.com/20110602/where-did-groupons-billion-do... ) to be a scathing indictment of Groupon, to the level where it could attract the label "Ponzi Scheme" or the less harsh "Very bad Investment choice". Seeing that the lion share of the two recent funding rounds were used to pay back investors, leaving very little on the table to fund their growh (this is when they are bleeding over 10…

Cash out early, cash out often!

Re: Groupon is Effectively Insolvent

#53

Post by Apocryphon »

narrator wrote: post #39
tzs wrote: post #4

To save people having to fight with that sites asshole design, here's the text: I'll start by tipping my hat to Andrew Mason. He caught social mood just right, creating a coupon/local/flashmob hybrid business model at the perfect time, and has created the fastest-growing company on a revenue basis in American history. That being said, it's operating like a Ponzi scheme that needs constant infusions of cash to stay af…

What is it with everything being described as a Ponzi scheme these days? Groupon, Bitcoin, Subprime MBSs, Social Security, etc.

The 2000s really did teach us that anything related to economics is a Ponzi scheme.

Hell, does the federal budget qualify as a Ponzi scheme?

Re: Groupon is Effectively Insolvent

#54

Post by petercooper »

Macsenour wrote: post #47

Don't roll your eyes, but this is exactly what Reagan did to the Russians. Basically, spend more and faster than the other guy until he cries uncle. Groupon is raising money, spending like crazy to be the top dog. When the other "coupon" companies can't keep up, Groupon will buy them, retaining their #1 position. Once all of the others are gone or reduced to a tiny size, they'll go back to a sustainable model. This e…

Perhaps. It took Amazon 6 years to turn a profit, and a mere $5m on $1bn revenue at that.

Re: Groupon is Effectively Insolvent

#55

Post by jpadvo »

Cherian_Abraham wrote: post #5

I found this link ( http://allthingsd.com/20110602/where-did-groupons-billion-do... ) to be a scathing indictment of Groupon, to the level where it could attract the label "Ponzi Scheme" or the less harsh "Very bad Investment choice". Seeing that the lion share of the two recent funding rounds were used to pay back investors, leaving very little on the table to fund their growh (this is when they are bleeding over 10…

This was a purchase: the investors bought part of the company. When they signed over a billion dollars, they were not trying to fund operations; they wanted to become part owners. They know that the vast bulk of the money would go straight to earlier employees and investors.

This was a risky investment, yes. But it is neither unbelievably stupid nor criminally insane to make a risky investment. High risk investments can be quite at home in a well developed portfolio.

Now, if Groupon deceived the investors about where the money was going, that would quite possibly be a criminal act. Literally. But that almost certainly didn't happen, or we'd be hearing about it.

Re: Groupon is Effectively Insolvent

#56

Post by pkaler »

The word "effectively" in the title is a weasel word.

Groupon is balance sheet insolvent by definition. Their liabilities are greater than assets.

Groupon is cash flow solvent by definition. They are able to pay liabilities NET60.

In Q2-Q4 2010, Groupon had $669mm with a net loss of $398mm. That is a ratio of about -0.59. In Q1 2011, Groupon had revenue of $644mm with a net loss of $102mm. That is a ratio of about -0.16.

If you are long Groupon, then you are betting that -0.16 approaches zero and then turns positive.

The moral of the story is: haters gonna hate.

Re: Groupon is Effectively Insolvent

#57

Post by code_duck »

jonprins wrote: post #40
code_duck wrote: post #20

Earlier quoted context omitted.

That's similar to other problems I have with sites recently: their super-special javascript on textareas screws up my own resizing of them, and even worse, ruins ctrl/cmd Z! I don't know how they do it, but screwing up Undo is pretty serious.

This happens when you listen to and then improperly handle keyboard events. Somebody probably just copied a script from w3schools and smashed their face into it for a few hours until it did some approximation of what they might have maybe wanted it to do. Unfortunately, the buckshot approach to software development leaves a lot to be desired. Especially when you start with such a horrible original product as w3school…

These are fairly professional sites, though, run by otherwise decent designers and programmers. I think it's more that they adopted an incomplete jQuery plugin, and didn't fully consider the repercussions of changing standard browser controls. That's happened a lot in the past few years... people customize select menus, checkboxes, etc. that are customized (mainly in appearance) with javascript and CSS, and then lost a lot of the native functionality. It produces problems that are reminiscent of why people turned on Flash sites... hopefully the progress of HTML 5 and CSS3 will help this situation, by providing a standard way to do things that have need custom hacks in the past.

Re: Groupon is Effectively Insolvent

#58

Post by philipkimmey »

I was very young during the dot com boom, but this sounds awfully familiar. Someone (PG?) described the approach of the era as burning investment to create revenue, profits be damned, then looking for a huge IPO.

Presumably Groupon has actual plans for becoming profitable, but big IPOs of companies with dubious fundamentals does sound like a description of a bubble to me. (Linkedin's stock was briefly over $100 - crazy!)

Re: Groupon is Effectively Insolvent

#59

Post by jasonlotito »

cosgroveb wrote: post #41
jasonlotito wrote: post #21

Earlier quoted context omitted.

Use a browser that lets you resize text? Before you say anything, I already know. I just think this is a problem with the browser, not with a site. The browser should be able to resize the text. If it can't, it's a browser failure.

Shoot. I downvoted you jason, sorry. I looked at the site's CSS and I think the problem we're experiencing is due to this site using -webkit-text-size-adjust: none; The text does not grow in size at all in Chrome for me (while the other page elements do... the text gets squished which gives it some illusion of growing). I tested it in Firefox 4 and increasing the font size works fine... So, I know you've been downvot…

It's okay. Technically, this thread about resizing text is off topic. =)

And, as I mentioned: Yes, I know about the CSS problems that prevent text resizing. I've just always thought it should be considered a browser bug if it doesn't work. After all, if the UI gives you the option to increase the size of the text, it should increase the size of the text regardless of the CSS on the page.

Re: Groupon is Effectively Insolvent

#60

Post by 3am »

bcrescimanno wrote: post #29
3am wrote: post #27

Earlier quoted context omitted.

"The only argument to say that they're not a ponzi scheme is that there's actually a legitimate business with revenue associated with it." That isn't a minor point. There is a big different between stupid investors with full information and a Ponzi scheme. It is not an abstract argument. The first is common, the second will land you in prison.

If the purpose of a business is to generate profit for its owners (investors), then the only business Groupon has successfully operated to this point has been a ponzi scheme. Just because it's common doesn't mean it's not a ponzi scheme. It's just a ponzi scheme in a pretty dress. I'd be willing to go further and say it's just as bad because if you read their S1 and their made up accounting "principles," they're actu…

fwiw, I upvoted both of your comments. I think it's obvious this is a difficult subject based on how many intelligent people disagree on it. I very strongly disagree with your conclusion, but I respect it and disagree with the downvotes.
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