Groupon shares tumble to new low after lock-up expires • Hacker News Board

Re: Groupon shares tumble to new low after lock-up expires

#11

Post by wavephorm » Sat, Jun 02, 2012, 8:38 PM UTC

soup10 wrote: post #2

Groupon is the poster child for everything that's wrong with the silicon valley startup model. Founders creating stupid companies with marginally useful products and the VCs pumping millions into them in hopes of a quick profit.

Groupon isn't a stupid company, it's a great idea actually. They turned down a lofty Google offer and decided to go the IPO route. Only time will tell if their business can last, and not get eaten alive by competitors.

I think it's a good thing their share price isn't just going to the moon and then crashing and wiping out an entire industry like what happened in the Dom-Com crash. Maybe a subdued IPO market will mean this time it'll be more like a boom period, and not another bubble getting ready to burst.

Re: Groupon shares tumble to new low after lock-up expires

#12

Post by legutierr » Sat, Jun 02, 2012, 9:18 PM UTC

hasker wrote: post #7

The WSJ has an interesting article on Groupon today also. Actually, it is more of an excerpt from "Groupon's Biggest Deal Ever" ( http://www.amazon.com/Groupons-Biggest-Deal-Ever-Unbelievabl... ). "Behind Groupon's $6 Billion Brushoff" ( http://online.wsj.com/article/SB1000142405270230364010457744... ) With their current market cap just above 6bn, it may have actually served everyone better to take the Google deal. A…

You assume it was Groupon who turned down the deal and the public "rejection" was not just a face-saving maneuver done as a private favor by Google to Groupon's investors after they themselves had rejected the deal.

Re: Groupon shares tumble to new low after lock-up expires

#13

Post by legutierr » Sat, Jun 02, 2012, 9:22 PM UTC

InclinedPlane wrote: post #8

vinayan3 wrote: post #5

They are turning things around ever so slightly at groupon. They have gone from negative operating income to positive. Still no income after taxes. I doubt that Groupon that will really turn a profit.

If it's not trivially easy to make a profit on a company like groupon where they split revenue 50/50 with the companies they advertise for, there has to be something deeply wrong.

They may be splitting revenue 50/50 with their customers, but their customers frequently have to give up most of their profit or even take a loss to be able to do business with Groupon. In other words, their customers aren't exactly beating down their door; a significant, and expensive, sales effort is required.

Re: Groupon shares tumble to new low after lock-up expires

#14

Post by jfarmer » Sat, Jun 02, 2012, 9:45 PM UTC

soup10 wrote: post #2

Groupon is the poster child for everything that's wrong with the silicon valley startup model. Founders creating stupid companies with marginally useful products and the VCs pumping millions into them in hopes of a quick profit.

When Groupon was growing early on, it was an example of a successful startup founded without the usual Silicon Valley trappings, in Chicago. When Groupon flames out, it's an example of Silicon Valley's excess.

Can't win, it seems. ;)

Re: Groupon shares tumble to new low after lock-up expires

#15

Post by bfe » Sat, Jun 02, 2012, 9:56 PM UTC

A more or less big dip for a tech company when the lock-up expires was already an old cliche before the dot-com bust. I'm puzzled why the companies don't do more to prevent it.

Re: Groupon shares tumble to new low after lock-up expires

#16

Post by wololo » Sat, Jun 02, 2012, 10:44 PM UTC

wavephorm wrote: post #11

soup10 wrote: post #2

Groupon is the poster child for everything that's wrong with the silicon valley startup model. Founders creating stupid companies with marginally useful products and the VCs pumping millions into them in hopes of a quick profit.

Groupon isn't a stupid company, it's a great idea actually. They turned down a lofty Google offer and decided to go the IPO route. Only time will tell if their business can last, and not get eaten alive by competitors. I think it's a good thing their share price isn't just going to the moon and then crashing and wiping out an entire industry like what happened in the Dom-Com crash. Maybe a subdued IPO market will mea…

http://blogs.wsj.com/deals/2010/12/16/debunking-google-group...

Re: Groupon shares tumble to new low after lock-up expires

#17

Post by earbitscom » Sun, Jun 03, 2012, 12:46 AM UTC

hasker wrote: post #7

The WSJ has an interesting article on Groupon today also. Actually, it is more of an excerpt from "Groupon's Biggest Deal Ever" ( http://www.amazon.com/Groupons-Biggest-Deal-Ever-Unbelievabl... ). "Behind Groupon's $6 Billion Brushoff" ( http://online.wsj.com/article/SB1000142405270230364010457744... ) With their current market cap just above 6bn, it may have actually served everyone better to take the Google deal. A…

Let's keep in mind that they rejected a $6B buyout while they have constantly dumped shares every chance they get. There is a reasonable chance that they turned down the offer knowing that it would be easier to cover up shady accounting practices in their IPO than it would be during Google due-diligence.

Re: Groupon shares tumble to new low after lock-up expires

#18

Post by jordo37 » Sun, Jun 03, 2012, 12:54 AM UTC

jerf wrote: post #10

pbreit wrote: post #6

Earlier quoted context omitted.

Disagree. Besides that it's not in silicon valley, it made huge progress in a notoriously difficult yet humongous service category: local and small business marketing. It could have remained a tiny player like the 100s of copycats but instead decided to "go for it" by raising lots of money and expanding rapidly (the best use of vc and ipo money). People are much to focused on the original daily deal business (which r…

I might agree with you if it weren't for the strong stench of fraud coming off the whole enterprise. And I don't mean vague "I'm misusing the term Ponzi scheme" fraud concerns about the entire business model, I mean, accounting fraud. (And I also mean the term more colloquially than legally. It may be the case that their numbers are entirely legal, but still carefully spun to produce results that mislead people.)

I am curious about this especially given their most recent 2012Q1 earnings which were solid and I am assuming from what I have read seemed to address the returns loss and other financial issues from previous quarters.

Re: Groupon shares tumble to new low after lock-up expires

#19

Post by raj_o » Mon, Jun 04, 2012, 1:02 AM UTC

Do we know for sure Groupon was offered $6 billion? I doubt Google would be that stupid to offer that much for a startup. Hell, why not just offer VC money and own part of the company for far less money. That story sounds like hype.

Groupon's real problem is their business model is too easily copied. It's also heavy on the service end, where it relies on a person to person business experience, something Google is kind of adverse to.

Around here all I see is advertisements for Living Social. I haven't counted but I am sure there are hundreds of other copy cats out there. It's hard to guess which company is going to have the best business model in a new business type, or really if the business model has staying power at all.

Doesn't this business model attract people that want a great deal for almost nothing? It introduces people to a business they might not know about which is good. But can't people just visit local businesses if they care to get to know them? I don't get the business model at all.