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Groupon stock sinks to new low, investors sue

chicagobusiness.com

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Re: Groupon stock sinks to new low, investors sue

#41

Post by tptacek »

pbreit wrote: post #12
guptaneil wrote: post #7

As a Silicon Valley native currently living in Chicago, I've always found it disappointing that Groupon is the poster child of innovation and entrepreneurship in Chicago. They seem to lack a solid business plan and have a history of deliberately misleading investors and businesses. Far more impressive companies, such as 37signals or GrubHub, are based here that deserve that kind of attention instead. I very much doub…

> I was in a barbershop a few weeks ago, where the owner told me about one of the Groupon executives who was in the shop earlier Great source!

I don't know why this was downmodded. It's trenchant. Nobody on HN seems to like Groupon, but that doesn't make this kind of ridiculous hearsay more valid.

Re: Groupon stock sinks to new low, investors sue

#42

Post by dailyllama »

lubos wrote: post #24
snorkel wrote: post #8

Who would guess that there could be an integrity issue with a company that tried to invent new accounting rules where marketing costs don't appear on the balance sheet? You'd have a crystal ball or a brain to see this coming.

Marketing costs are not supposed to appear on balance sheet. I don't really watch this company but if I remember correctly, their way of doing accounting was to show all received money from customers as income instead of liabilities since they were collecting half of it on behalf of vendors. They were simply inflating their revenue but it's not like it matters, because profit (loss) would be always the same regardles…

He was referring to ACSOI or whatever it was called, that tried to show profitability by subtracting out marketing costs, in a marketing-heavy organization.

You're referring to Groupon's decision to treat cash they collect on behalf of merchants (which should be treated as financing cash flows) as operational cash flows, thus making their cash flow look reasonable when it's actually horrid.

Re: Groupon stock sinks to new low, investors sue

#44

Post by tptacek »

My perception is that these kinds of shareholder suits are trivial to file, and that they occur regularly any time the stock of any public company drops significantly after some event about them hits the news.

It would be interesting to see someone chart this.

(No comment about Groupon's long-term viability is being implied here).

Re: Groupon stock sinks to new low, investors sue

#45

Post by byrneseyeview »

Quizzy wrote: post #21

They should have unloaded this fraud on Google when there was a $6 billion cash offer sitting on the table (assuming that was true). The fact that Google even offered that much leads me to believe that they have jumped the shark with that offer. Anybody who knows anything about retail would have studied the business model and realized that this was not sustainable. Obvious red flags: 1. Heavy reliance on field sales…

Why should they have sold for $6 billion? They're worth $9.6 billion today.

Groupon is not a bet on the coupons business--that doesn't justify the current valuation. Groupon is a bet that if you can reinvent the Yellow Pages, at scale and online, you can make a ridiculous amount of money. It's probably one of the largest companies around with such a high probability of failure, but their value if they end up being the winner in local is just staggering.

Re: Groupon stock sinks to new low, investors sue

#46

Post by run4yourlives »

dantheman wrote: post #17
bfrog wrote: post #2

Please. As if anyone with half a brain couldn't see this ponzi scheme on the blowup train of doom. Who are these magical investors?

It's not a ponzi scheme.

Perhaps not, but the only way it's a sound investment is if you exit quickly by finding another sucker that is willing to take a risk it doesn't come crashing down before he can exit. Everyone agrees there is no long term business model there, certainly not at that valuation.

But no, not a ponzi scheme at all.

Re: Groupon stock sinks to new low, investors sue

#47

Post by joezydeco »

guptaneil wrote: post #7

As a Silicon Valley native currently living in Chicago, I've always found it disappointing that Groupon is the poster child of innovation and entrepreneurship in Chicago. They seem to lack a solid business plan and have a history of deliberately misleading investors and businesses. Far more impressive companies, such as 37signals or GrubHub, are based here that deserve that kind of attention instead. I very much doub…

"Far more impressive companies, such as 37signals or GrubHub, are based here that deserve that kind of attention instead."

Every time someone says this, the neck-hairs of every Orbitz employee (current and former) stand up on end and twitch a little.

Re: Groupon stock sinks to new low, investors sue

#48

Post by jerf »

run4yourlives wrote: post #43

Investors sue? Really? So basically, I want to drink the koolaid but god damn you if it makes me sick... You should not be allowed to sue as a method to correct your own stupidity.

In general, I'd agree. However, many previous articles on HN have been about how Groupon has engaged in some shady accounting practices to get to where it is. It may be enough to make this exceptional enough that the investors have some "real" (for suitable definitions) grounds for complaint.

Re: Groupon stock sinks to new low, investors sue

#49

Post by ssharp »

I think there are so many ways technology can help mom + pop type small businesses inexpensively stay competitive with the numerous forces working against them (including retail giants with substantially better technology), and the huge interest in daily deals justifies this assertion--at least in some small way.

But the technology needs to help the small business actually improve. Groupon doesn't do this. For the most part, it plays smoke and mirrors with revenues and the costs or profits are not entirely known because the small business cannot measure them.

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