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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

#51

Post by furyofantares »

tptacek wrote: post #41
pbreit wrote: post #12

Earlier quoted context omitted.

> 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.

I'd guess it's due to the sarcastic tone. If he had your made your post instead I think it would be faring better.

What really gets me is the barbershop post actually admits that it's very unlikely for the source to be telling the truth, then goes on to give it credit anyway because it agrees with his own speculation.

Re: Groupon stock sinks to new low, investors sue

#52

Post by bomatson »

Quizzy wrote: post #39
untog wrote: post #11

Earlier quoted context omitted.

Why do you say Zynga? It was my understanding that their financials are a good bit more stable, even if they are Facebook-dependent.

Zynga's business model is like any other gaming publisher (such as EA, Blizzard, etc.). To succeed in gaming you MUST have a pipeline of games that continue revenue growth. If you cannot create your own, then you must acquire indie developers (OMGPOP recently). In time Zynga stock will be no different than any other gaming publisher stock. Look at Blizzard: other than Diablo, Starcraft and WoW, it has created nothing…

I can appreciate this insight on Zynga, but I'd like to offer another perspective:

First off, have you seen the way Blizzard's stock performed during 2008? It was one of the few that continued to grow...

Rovio has more than just Angry Birds direct sales, it has a TON of merchandising opportunities with the characters (think Pixar). Plus they have a huge base of users that is excited to see what's next.

I'd also contend the rock stars analogy is backward - It is FAR more risky to assume a sole person can continue re-inventing themselves over a entire career. Granted, it's hard for game publishers, but at least there's a team and a more defined process for the innovation.

Re: Groupon stock sinks to new low, investors sue

#53

Post by jetti »

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.

It appears that the reason they are suing is because the 4th quarter results were posted and then based on that information people bought up the stock and then Groupon came back and said "Ya...about that information. We made a mistake" and the real results were much worse than they originally said, which makes the stock price drop.

I think it is a valid approach because a company should be able to get its own accounting correct. However, based on the creative accounting from Groupon (and other issues) I'm really surprised the FTC allowed them to have an IPO to begin with.

Re: Groupon stock sinks to new low, investors sue

#55

Post by zecho »

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.

I think in this case it makes sense. Groupon restated a sharp drop in their reported revenues over three years.

People don't necessarily invest in things they think are particularly good business models. They invest in things that are undervalued. If you looked at the revenue/price and thought it was undervalued and then Groupon changed 3 years worth of data on your after you made a stock purchase, you'd sue too.

Just look at these reductions. They're more than just a minor correction from Groupon:

- For 2008, revenue was reduced to $5,000, from $94,000.

- For 2009, revenue was reduced to $14.54 million, from $30.47 million.

- For 2010, revenue was reduced to $312.9 million, from $713.4 million.

Re: Groupon stock sinks to new low, investors sue

#56

Post by notJim »

Quizzy wrote: post #26
api wrote: post #20

I remember hearing about how this company ran, and figuring it was nothing but a giant boiler room sales pit and a gimmick. I am not surprised.

Anecdotally, the first generation of sales rep have nothing but depressing things to say about this entire market segment now. The first year sales numbers were gangbusters, until their clients called back complaining, swearing never to do another Groupon deal, ever again. It's not just Groupon, this entire business model is unsustainable: asking a retailer to discount his products for a fee in the hopes that he will…

Not only that, but I suspect that people who are loyal to businesses and like interacting with local business owners are less likely to use sites like groupon, because they know that the businesses often get screwed, and because they don't want to be thought of as bargain-shoppers.

Re: Groupon stock sinks to new low, investors sue

#57

Post by run4yourlives »

zecho wrote: post #55
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.

I think in this case it makes sense. Groupon restated a sharp drop in their reported revenues over three years. People don't necessarily invest in things they think are particularly good business models. They invest in things that are undervalued. If you looked at the revenue/price and thought it was undervalued and then Groupon changed 3 years worth of data on your after you made a stock purchase, you'd sue too. Jus…

People don't necessarily invest in things they think are particularly good business models.

If you can't figure out the business model generating the reported millions, it's your own fault for thinking those millions are undervalued.

How many of these investors didn't actually care about the value of the stock, so long as there was somebody around tomorrow that would buy it for more?

Sorry, but I have no sympathy when you willingly play the game and then get burned by the same things you intended to inflict on someone else.

Re: Groupon stock sinks to new low, investors sue

#58

Post by MatthewPhillips »

Quizzy wrote: post #26
api wrote: post #20

I remember hearing about how this company ran, and figuring it was nothing but a giant boiler room sales pit and a gimmick. I am not surprised.

Anecdotally, the first generation of sales rep have nothing but depressing things to say about this entire market segment now. The first year sales numbers were gangbusters, until their clients called back complaining, swearing never to do another Groupon deal, ever again. It's not just Groupon, this entire business model is unsustainable: asking a retailer to discount his products for a fee in the hopes that he will…

There's nothing ridiculous about using sales as a customer acquisition strategy. What is unsustainable about GroupOn, etc. is the requirement for extreme discounting that crushes the retailer.

Re: Groupon stock sinks to new low, investors sue

#59

Post by run4yourlives »

jetti wrote: post #53
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.

It appears that the reason they are suing is because the 4th quarter results were posted and then based on that information people bought up the stock and then Groupon came back and said "Ya...about that information. We made a mistake" and the real results were much worse than they originally said, which makes the stock price drop. I think it is a valid approach because a company should be able to get its own account…

Groupon's claims were so outlandish that a layman could have figured they weren't up to snuff.

At some point, personal responsibility for your own investments is part of the risk.

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