Groupon stock sinks to new low, investors sue • Hacker News Board

Re: Groupon stock sinks to new low, investors sue

#61

Post by ceejayoz » Wed, Apr 04, 2012, 6:26 PM UTC

zaidf wrote: post #40

victork2 wrote: post #3

Who would have imagined that groupon had a future? It worked on the novelty effect and it was doomed to fail. On the other hand, Chicago business is full of bugs. Ghostery block 13 (!) calls to different websites such as: Quantcast, 24/7 real media, Outbrain etc... I won't visit this website again. I wish I was warned of that before hand not when I go to the website, I value my privacy more than going there.

It worked on the novelty effect and it was doomed to fail. A little premature to write an obituary of a company that finished 2011 with 1.6B in revenue.

Not if it's unlikely to turn that revenue into actual profits.

Re: Groupon stock sinks to new low, investors sue

#62

Post by ceejayoz » Wed, Apr 04, 2012, 6:28 PM UTC

run4yourlives wrote: post #59

jetti wrote: post #53

Earlier quoted context omitted.

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.

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

If that's the case, it's pretty clear-cut fraud, which supports the lawsuit argument even more.

Re: Groupon stock sinks to new low, investors sue

#63

Post by unabridged » Wed, Apr 04, 2012, 6:28 PM UTC

zaidf wrote: post #40

victork2 wrote: post #3

Who would have imagined that groupon had a future? It worked on the novelty effect and it was doomed to fail. On the other hand, Chicago business is full of bugs. Ghostery block 13 (!) calls to different websites such as: Quantcast, 24/7 real media, Outbrain etc... I won't visit this website again. I wish I was warned of that before hand not when I go to the website, I value my privacy more than going there.

It worked on the novelty effect and it was doomed to fail. A little premature to write an obituary of a company that finished 2011 with 1.6B in revenue.

Not when that company's popularity has leveled off and still finished last year with a $370M loss.

http://biz.yahoo.com/e/120330/grpn10-k.html

http://www.google.com/trends/?q=groupon&ctab=0&geo=a...

Re: Groupon stock sinks to new low, investors sue

#64

Post by MatthewPhillips » Wed, Apr 04, 2012, 6:28 PM UTC

unohoo wrote: post #33

The problem with Groupon and other local deal companies is that they have to manage fluctuations on both the consumer as well as the merchant side. Even if one side of the equation wobbles a little, Groupon will feel the impact. I think at this stage, Groupon is fighting a dual (losing) battle: 1) Merchants perception of the whole daily deal market is very negative. Repeat business is quite low and it mainly attracts…

The local deals is analogous to department store clearance sales. Retailers have perfected the art of the sale and they know that clearance sales are a different animal. If someone comes into you store and heads straight to clearance they can't be upsold. Don't waste your time on them.

This is different from your event sale, which are an excellent way to gain repeated customers (and upsell them). There is a future for local deal sites but it needs a different hook with customers.

Re: Groupon stock sinks to new low, investors sue

#65

Post by ohashi » Wed, Apr 04, 2012, 6:29 PM UTC

zaidf wrote: post #40

victork2 wrote: post #3

Who would have imagined that groupon had a future? It worked on the novelty effect and it was doomed to fail. On the other hand, Chicago business is full of bugs. Ghostery block 13 (!) calls to different websites such as: Quantcast, 24/7 real media, Outbrain etc... I won't visit this website again. I wish I was warned of that before hand not when I go to the website, I value my privacy more than going there.

It worked on the novelty effect and it was doomed to fail. A little premature to write an obituary of a company that finished 2011 with 1.6B in revenue.

1.6B in revenue is pretty meaningless if you're not even making a profit. They are simply really good at losing a lot of money.

Re: Groupon stock sinks to new low, investors sue

#66

Post by bhousel » Wed, Apr 04, 2012, 6:33 PM UTC

tptacek wrote: post #44

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).

As someone who builds legal matter management software for large publicly traded companies, I can confirm that your perception is correct.

Public companies are sued all the time for this kind of stuff. These lawsuits often allege misrepresentation in a company's SEC filings.

Re: Groupon stock sinks to new low, investors sue

#67

Post by tucson » Wed, Apr 04, 2012, 6:35 PM UTC

edw519 wrote: post #36

The first two shareholder lawsuits were filed Tuesday in federal court in Chicago after the markets closed, seeking class-action status for people who bought stock before the company restated fourth-quarter financial results on Friday. Perhaps those people should have been reading Hacker News: http://www.hnsearch.com/search#request/all&q=groupon&#38... (The first post is rather long and fairly neutral, but check out…

Thanks for the link. What I find troubling is to read so many articles pointing to shady business practices from Groupon and bubble valuation, and still the SEC lets the IPO go through and investors lose their money - that part did not happen yet but it seems written on the wall.

Re: Groupon stock sinks to new low, investors sue

#68

Post by JHSheridan » Wed, Apr 04, 2012, 6:37 PM UTC

zaidf wrote: post #40

victork2 wrote: post #3

Who would have imagined that groupon had a future? It worked on the novelty effect and it was doomed to fail. On the other hand, Chicago business is full of bugs. Ghostery block 13 (!) calls to different websites such as: Quantcast, 24/7 real media, Outbrain etc... I won't visit this website again. I wish I was warned of that before hand not when I go to the website, I value my privacy more than going there.

It worked on the novelty effect and it was doomed to fail. A little premature to write an obituary of a company that finished 2011 with 1.6B in revenue.

This argument always blows my mind. Who cares about revenue? Profit is what counts. If you make 10 trillion, but have to spend 10 trillion and 1, you're failing.

Web-based companies have to make a profit too. Why do people forget this?

Re: Groupon stock sinks to new low, investors sue

#69

Post by larrys » Wed, Apr 04, 2012, 6:37 PM UTC

furyofantares wrote: post #51

tptacek wrote: post #41

Earlier quoted context omitted.

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.

"He was saying we shouldn't expect Groupon to be around in 10 years because the company's plan is to collect as much cash as possible, fire everybody, and shut down, keeping the money for the investors."

Because the problem isn't the source (the barber). It's the idea that a groupon executive would have said something like this to his barber, physician, plumber etc.

Maybe bragging to his call girl, maybe to a friend when drunk (and was overheard) but it's ridiculous to think someone would say something like this even in jest.

Re: Groupon stock sinks to new low, investors sue

#70

Post by trimbo » Wed, Apr 04, 2012, 6:38 PM UTC

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…

> Id fell apart when it couldn't come up with something better than the Doom franchise.

Except for, you know... Quake.

On your other point. The difference between Zynga and EA is that Zynga's games have a huge turnover rate and a very low percentage of paying customers. EA's games -- at least most of their games -- have 100% paying customers and have a large returning customer rate year after year (Madden 11, Madden 12, Madden 13, Fifa 11, Fifa 12...).

So in other words, Zynga's business model is completely different than EA's.