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I've been getting what seem to be Groupon-ish offers from both Amazon and Google. Basically discount deals for things in my area, "pay $10 for $20 worth of foo" kind of things. I never (that I'm aware of) asked for these offers, and it seems that if both Google and Amazon are actively pushing these out to their user base that Groupon is already borked.
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 screwe…
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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.
> Doesn't it concern you that Groupon works best for services that no one needs? Even if that were the case, not in the slightest. Massive businesses are built on items that you or someone do not perceive to be needed. But Groupon also works in austere times both because people are looking for deals and businesses are looking for inexpensive or free marketing.
There has been a lot of research done on the topic of underpricing for book-built IPOs (like this one). The most popular conclusion I have seen is that it's a form of compensation for the underwriters and their clients. Underwriters pick their best clients who in exchange for doing business with the firm and revealing their "proprietary information," get access to IPOs that are very underpriced.
Raising money isn't the singular objective of an IPO. What the issuer wants is the creation of a liquid market for their shares, analysts to follow said market, and to be perceived as a successful company in order to enable follow-on offerings. Raising less money in order to enable these things, especially for the creation of a liquid market and analyst following is well worth it for the issuer.
Investors want to be compensated for their research and taking on risk. Underwriters allocate shares to their best customers in exchange for their information.
This comment isn't very clear or convincing. Jay Ritter from University of Florida has a lot more information and links on all of the above: http://bear.warrington.ufl.edu/ritter/ipodata.htm and http://bear.warrington.ufl.edu/ritter/ipolink.htm.
Basically, leaving no money on the table is much costlier than having the IPO underpriced by ~50%.
Groupon is an interesting IPO, not for how much it's stock rose but for the problems in its business model. A much better indicator of how well their IPO went will be the closing prices 1, 6, and 12 months form now.
This is very unsurprising. The majority of IPOs are underpriced and in some ways the underpricing is a measure of success. There has been a lot of research done on the topic of underpricing for book-built IPOs (like this one). The most popular conclusion I have seen is that it's a form of compensation for the underwriters and their clients. Underwriters pick their best clients who in exchange for doing business with…
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You can't yet.
What are the rules determining when you can? (I'm rather uneducated on markets).
With such a small float, put-call parity isn't going to exist - the cost of borrowing the stock is going to make buying puts pretty pricey.
I feel sorry for the people who bought puts on LNKD, which also had a tiny float.
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Short term exhuberence or organised pump and dump? We've seen it before with the tech IPOs.
It has lockup period of 180 days so that the insiders and the major shareholders can't dump the stock immediately.. http://www.sec.gov/Archives/edgar/data/1490281/0001047469110...
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…
E*Trade won't let me short it, at the moment anyway, because they say they can't borrow shares for it. I haven't felt this strongly about a short in a long time, either.
Eventually you'll be able to buy put options, but you're going to pay a huge premium because of that float - there's a real risk the clearing firm will force your market-maker to buy stock, which has to be priced into the cost of the put.
Buying options is sort of like gambling on a sports team. When the sentiment's one-sided, the odds naturally get adjusted. You'll only make a bit of money shorting Groupon if you're right, but you'll still lose everything if you're wrong.
If you absolutely must do this, at least buy a put spread to hedge your risk at a bit.