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Groupon shares open up 40%

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Re: Groupon shares open up 40%

#11

Post by brador »

vsl2 wrote: post #7

I haven't felt this strongly about shorting a stock long-term in a long time. But I don't know how long the short-term irrational exuberance is going to last - will it wipe out my investment before the stock crashes down? I haven't seen one pro-Groupon (or general daily deals) analyses that says anything different than "it gets people in the door and generates buzz" which I think is nothing more than fuzzy PR talk si…

Short term exhuberence or organised pump and dump? We've seen it before with the tech IPOs.

Re: Groupon shares open up 40%

#12

Post by ippisl »

vsl2 wrote: post #7

I haven't felt this strongly about shorting a stock long-term in a long time. But I don't know how long the short-term irrational exuberance is going to last - will it wipe out my investment before the stock crashes down? I haven't seen one pro-Groupon (or general daily deals) analyses that says anything different than "it gets people in the door and generates buzz" which I think is nothing more than fuzzy PR talk si…

One rice university study says that 70% of health spa's , yoga studios and similar businesses see repeat customers. Since it doesn't cost a yoga studio to add a person to a lesson(up to a point), customer cheapness is less an issue and maybe daily deals are a new effective way to better scale certain kind of businesses.

Re: Groupon shares open up 40%

#13

Post by smackfu »

vsl2 wrote: post #7

I haven't felt this strongly about shorting a stock long-term in a long time. But I don't know how long the short-term irrational exuberance is going to last - will it wipe out my investment before the stock crashes down? I haven't seen one pro-Groupon (or general daily deals) analyses that says anything different than "it gets people in the door and generates buzz" which I think is nothing more than fuzzy PR talk si…

I've been burned by this before, especially by the margin requirements for a short-sale. It doesn't matter how confident you are a stock will crash, because if it keeps going up, eventually you will either need to sell at a big loss or add more money to keep up. And it's very tempting to short even more as it continues to go up, since you'll make even more when it crashes! And then you run out of money and are screwed.

In general, it's not a good idea to start from "this stock is priced illogically" and then apply logic to it.

Re: Groupon shares open up 40%

#15

Post by bcrescimanno »

I'm absolutely unsurprised that the shares were sharply up on the open; IPOs over the past decade have mostly turned into government-sanctioned (or at least ignored) "pump-and-dump" operations. One of the things I've come to despite having moved to Silicon Valley is this absolutely infantile obsession with by-the-minute stock prices.

Congrats to Groupon on their successful IPO; I still have very strong doubts that they have any means of building a successful, sustainable business. Time will tell better than my attempts at fortune-telling.

Re: Groupon shares open up 40%

#16

Post by jsm386 »

smackfu wrote: post #8
peterb wrote: post #3

"Groupon is only floating a small amount of shares, 35 million – about 5.5% of its 637.3 million shares outstanding." This reminds me of Jason Fried's prank that 37 Signals valuation tops $100B! http://37signals.com/svn/posts/1941-press-release-37signals-...

I guess, but that is how private companies are valued every day. I sell you 5% for $1 million, we are both agreeing that the company is worth $20 million.

But Groupon is now a public company and what they've done isn't exactly normal (though LinkedIn did something similar...and of course yesterday the follow-on was announced):

Groupon floated a record-low percentage of its total outstanding shares among U.S. Internet companies, helping to stoke demand. Only 4.7 percent of the stock was made available to the public, based on the offering terms. That’s less than in any U.S. Internet company IPO of more $200 million since at least 2000, Bloomberg data show.

http://www.bloomberg.com/news/2011-11-03/groupon-said-to-rai...

Re: Groupon shares open up 40%

#17

Post by sunchild »

ippisl wrote: post #12
vsl2 wrote: post #7

I haven't felt this strongly about shorting a stock long-term in a long time. But I don't know how long the short-term irrational exuberance is going to last - will it wipe out my investment before the stock crashes down? I haven't seen one pro-Groupon (or general daily deals) analyses that says anything different than "it gets people in the door and generates buzz" which I think is nothing more than fuzzy PR talk si…

One rice university study says that 70% of health spa's , yoga studios and similar businesses see repeat customers. Since it doesn't cost a yoga studio to add a person to a lesson(up to a point), customer cheapness is less an issue and maybe daily deals are a new effective way to better scale certain kind of businesses.

Doesn't it concern you that Groupon works best for services that no one needs? I would say that in times of austerity, yoga, helicopter rides, health spas, parachuting, etc. are the first to go.

Re: Groupon shares open up 40%

#18

Post by sunchild »

kokey wrote: post #6
raganwald wrote: post #2

How many of the folks who bought these shares believe strongly in Groupon’s fundamentals and plan to “buy and hold?” Raise your hand. ... Crickets.

While others don't know when it will be a good time to short it, even though they want to. If you get it wrong you can get burnt. With more Linkedin stock coming onto the market and the possibility of Facebook next year, things can get very interesting. I like to buy and hold. I don't buy tech stocks. I work in IT. It might say something about having more blind confidence in predicting markets I understand less, or i…

When this Groupon offering sorts itself out (and it will), it will have a negative effect for Facebook and other IPOs in the pipeline.

Re: Groupon shares open up 40%

#19

Post by SODaniel »

I would invest long term in groupon over my own dead body. $13 BILLION valuation for a company that took in $900 million+ and dumped 90% to founders while heavily in the red? Yeah, seems like a great investment.
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