Groupon’s Strikeouts Reveal an Unspoken Truth • Hacker News Board

Re: Groupon’s Strikeouts Reveal an Unspoken Truth

#51

Post by rob08 » Thu, Aug 04, 2011, 6:13 PM UTC

kirsty wrote: post #45

sc68cal wrote: post #34

Earlier quoted context omitted.

Or their business model is to sell irrational exuberance and cash out before anyone notices. Don't forget that they hid $36.2 million in stock-based compensation as part of this accounting trick.

It is common practice among listed companies to strip out stock-based compensation charges, acquisition-related charges and other non-cash charges as part of their financial information. [1] Their argument for this is generally because these charges are seen as "accounting mumbo-jumbo" by the rest of the world rather than real costs incurred in the running of the business. I agree that stripping out marketing costs t…

While I agree that there are many companies that do strip out stock-based compensation charges, in my opinion their reasoning, as you put it: "accounting mumbo-jumbo" charges" I do not agree with. Share-based compensation is very much a real cost for investors.

Also, when companies do these adjustments, they should carry it consistently throughputs its full extent, i.e. by estimating the dilution

Re: Groupon’s Strikeouts Reveal an Unspoken Truth

#52

Post by int3rnaut » Thu, Aug 04, 2011, 6:48 PM UTC

WillyF wrote: post #29

Oddly enough, there actually is a baseball statistic that takes strikeouts out of the equation. It also takes out home runs. It's called Batting Average on Balls In Play or BABIP. You can see the formula here: http://en.wikipedia.org/wiki/Batting_average_on_balls_in_pla... BABIP doesn't tell you a ton about a player's overall performance, but it does tell you how lucky they've been if you compare it to their historic…

Here's a hilariously strange link for this discussion-- BABip explained, with Groupon ads plastered about.

http://www.fenwaywest.com/2011-articles/june/sabermetrics-ex...

This part gets off topic but since we're talking SABERMETRICS!!...

I'm not that great of a statistician and truthfully just pay attention to this stuff for fantasy baseball, but I always find that BABip isn't the greatest for hitters, and as great as the data is (for anyone interested fangraphs is a great resource) interpreting this data can be troubling--I mean at the end of the 2008 season people thought Dunn's BABip was an indicator that he'd just fell apart--but he did turn that around for 2 seasons... and I think that was merely a product of him going from the NLwest to the NLeast(do you think the NLeast has that good of collective fielders)--and then to the ALC where he'd square off against more often than not a top tiered defensive team where he's now struggling. I guess my question with BABip how do you interpret luck with decreasing skill level? I've looked at that quite closely trying to look for correlations with age etc, and I can never find anything that shows me that BABip for interpreting upcoming season potential is anything but a crapshoot.

Re: Groupon’s Strikeouts Reveal an Unspoken Truth

#53

Post by corin_ » Thu, Aug 04, 2011, 7:18 PM UTC

eavc wrote: post #40

WillyF wrote: post #29

Oddly enough, there actually is a baseball statistic that takes strikeouts out of the equation. It also takes out home runs. It's called Batting Average on Balls In Play or BABIP. You can see the formula here: http://en.wikipedia.org/wiki/Batting_average_on_balls_in_pla... BABIP doesn't tell you a ton about a player's overall performance, but it does tell you how lucky they've been if you compare it to their historic…

I'm a big fan of the BABIP against stat for pitchers for the same reason. It's amazing to see how good a pitcher can look when his fielders are getting to everything only to have him fall of the table when the law of averages kicks in the next season.

To give a very rough idea that works, but pitchers can vary so much, for example some of them, when at their best, get a bunch of strikeouts, others will get a bunch of groundouts/DPs. A pitcher who doesn't throw many strikeouts but consistently makes it very hard for a ball to be hit anywhere that isn't an easy play defensively could looka lot luckier than someone who gets a lot of strike outs, but when he does get hit gets hit badly.

Re: Groupon’s Strikeouts Reveal an Unspoken Truth

#54

Post by eavc » Thu, Aug 04, 2011, 7:56 PM UTC

corin_ wrote: post #53

eavc wrote: post #40

Earlier quoted context omitted.

I'm a big fan of the BABIP against stat for pitchers for the same reason. It's amazing to see how good a pitcher can look when his fielders are getting to everything only to have him fall of the table when the law of averages kicks in the next season.

To give a very rough idea that works, but pitchers can vary so much, for example some of them, when at their best, get a bunch of strikeouts, others will get a bunch of groundouts/DPs. A pitcher who doesn't throw many strikeouts but consistently makes it very hard for a ball to be hit anywhere that isn't an easy play defensively could looka lot luckier than someone who gets a lot of strike outs, but when he does get…

True, but again, it's about variation from that individual's norm. A groundball pitcher will naturally have a good BABIP relative to others. If one year it's abnormally high for that person's history, though, it doesn't necessarily reflect an improvement in skill, though often these kinds of upticks in luck result in huge contracts.

*fixed a typo

Re: Groupon’s Strikeouts Reveal an Unspoken Truth

#55

Post by r00fus » Thu, Aug 04, 2011, 8:07 PM UTC

jeremymims wrote: post #9

Groupon has more than 100 million subscribers (mostly in America). If we assume that the total available market is another 50 million or so signups in the US, then these loss leader marketing expenses will drop dramatically (no need to offer $10 for a friend that buys a $5 deal). The attempt of this metric is to explain what their business looks like in another year or so when they've reached some level market satura…

What's crazy is that they think it's some sort of race when they have no barriers to entry (either natural or fabricated)... so they rush in an stake all this land... what's to keep LivingSocial (backed by Amazon) from just taking it from Groupon (ie, by higher marketing spend or lower margins)?

Groupon as it exists is completely running on vapors and wishful thinking.

Re: Groupon’s Strikeouts Reveal an Unspoken Truth

#56

Post by omaranto » Fri, Aug 05, 2011, 2:09 AM UTC

atlbeer wrote: post #10

What accounting firm prepared that S-1 with a straight face? They've got some cajones

Oddly enough "cajones" is also a Spanish word meaning drawers (the drawers were you put clothes, not the ones that are clothes). You probably wanted to write "cojones".

Re: Groupon’s Strikeouts Reveal an Unspoken Truth

#57

Post by Smirnoff » Fri, Aug 05, 2011, 10:52 AM UTC

Honestly, Groupon should have taken Google's deal. It seems that the main expense that's killing Groupon is customer acquisition cost. So Groupon needs to be integrated in the business that has zero (well, almost zero) acquisition costs ala Google.

Only then I think Groupon will become a profitable business. Until then I will sit back and watch how Groupon fails. I don't think Groupon has a runway longer than a year.