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Earlier quoted context omitted.
It is difficult, at best, to know anyone's position in a private company without insider knowledge. While it might be theoretically possible to short something using a company like SecondMarket, the prevailing wisdom is that if it's not public it's probably not being shorted.
Ah, yes, as I just corrected, but how 'bout being short on GroupOn?
What I don't get is this; how does Living Social do ~$500mm in revenue and still fail to be in the black? It's not like they have any physical merchandise. All their expenses should be personnel, servers and bandwidth right? How are they bleeding through over $500mm in a year then? All the employees are overpaid? Paying too much for servers?
They count it as revenue before paying the merchant. Their true revenue is probably much lower than $500mm.
Earlier quoted context omitted.
This is exactly what I would do if I was an evil publication: make a prediction as to the trendlines of a business, write up a report full of false evidence, send a draft to the target and then declare it was the target's responsibility, not mine, to ensure that my report was correct. What's different after this followup is that now CNN/Fortune is suspect too, because repeating this verbatim is unethical.
I don't have a firm opinion on the matter yet. I was initially suspicious of the initial report as I had never heard of them (PrivCo). However, I do work in advertising/PR and if someone submitted a claim like this to a spokesperson within four hours, we would at least say there are considerable and factual errors with your report, etc. This of course may have happened. My interest in following this story is personal…
It's actually even worse if underlying trend they're "reporting" on is true, because they've poisoned the well.
What I don't get is this; how does Living Social do ~$500mm in revenue and still fail to be in the black? It's not like they have any physical merchandise. All their expenses should be personnel, servers and bandwidth right? How are they bleeding through over $500mm in a year then? All the employees are overpaid? Paying too much for servers?
1. Many here seem to feel that taking 50% is unfair to their merchant partners. Yet, they are nonetheless struggling to turn a profit
2. Like any other coupon, LS deals run the risk of un-use. Speaking for myself, I have forgotten about at least 4 separate deals, and am not an active "daily deals" consumer.
How can LS ever be profitable? It feels like they are already absorbing as much net revenue as they can, and have the deck as reasonably stacked as possible. Is it a question of needing to run leaner (they do spend hand over fist, in my experience)?
Earlier quoted context omitted.
Was the "UPDATE" to the article published when you left your comment? UPDATE: Just got off the phone with Hamadeh [PrivCo CEO], who is standing by his original report. He says O'Shaughnessy is misleading his own employees, and that classifying the round as "equity" is a technicality given all of the debt-like provisions PrivCo continues to believe were attached. He also says that PrivCo spoke with a LivingSocial spok…
The update makes PrivCo look even worse, by implying that it was LivingSocial's responsibility to ensure that their bogus report was accurate. Look, I can play that game right now: I'll write a 3 page report on Dropbox's impending bankruptcy, send it to them, and when they don't respond report it as fact.
> our major competitor's market cap is now $3.9B He can't say "Groupon?" Seriously?
LivingSocial's response is extremely damning of "PrivCo".
What I do not understand is: what does an 'investor' expects 'injecting' 110 million dollars on a bankrupt business? There is nothing livingsocial can do to revert its current trajectory. It's not about the company, but the very core of its business model does not work, not one but dozen of similar companies failed early, are livingsocial and groupon trying to run some sort of ponzi scheme on desperate investors and…
we do not have the resources to sue. wish livingsocial and the other companies targeted by these pieces of shit would. it's all a giant scam.
what hurts the most is the pubs that parrot the 'research', like cnn did this time around, which gives it credibility.
edit: a16z and google pay them for their research. sad. http://www.privco.com/testimonials
What I don't get is this; how does Living Social do ~$500mm in revenue and still fail to be in the black? It's not like they have any physical merchandise. All their expenses should be personnel, servers and bandwidth right? How are they bleeding through over $500mm in a year then? All the employees are overpaid? Paying too much for servers?
After that they have a "team of more than 4,500 employees includes LivingSocial professionals in every city where we offer deals"[1], 19 offices[2] plus another office/shop thing called 918F Street[3] and they have a 5 month training program[4] which adds costs to their hosting, software design etc.
Once they've paid out for its 4,500 employees, offices, hosting, software design, training programme, legal costs etc they also have significant marketing costs as well. Although companies like Ampush have helped them to lower it recently[5]
[1] http://corporate.livingsocial.com/bythenumbers
[2] http://corporate.livingsocial.com/ourcompany
[5] http://ampush.com/ampush-lowers-livingsocials-cpa-costs-on-f...
LivingSocial's response is extremely damning of "PrivCo".
Agreed. But LivingSocial's response is also very damming of LivingSocial. They're fooked, to use a technical term.