Groupon IPO - Priced at $20 a share...going public today.

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chihlidog

chihlidog

Senior member
Apr 12, 2011
884
1
81
Im not touching this one, but if I had to guess I'd say this one will trend downwards long term.
 
kranky

kranky

Elite Member
Oct 9, 1999
21,015
139
106
Groupon has nothing that can't be duplicated (and is being duplicated) by others. It's true that it can bring in new long-term customers but the problem is those are a small percentage of the people who use the deal. By far most of the Groupon buyers are only coming for the deal and never going to return. It's mostly useless as a marketing tool.

I'd want nothing to do with their stock.
 
Miramonti

Miramonti

Lifer
Aug 26, 2000
28,651
100
91
kranky said:
Groupon has nothing that can't be duplicated (and is being duplicated) by others. It's true that it can bring in new long-term customers but the problem is those are a small percentage of the people who use the deal. By far most of the Groupon buyers are only coming for the deal and never going to return. It's mostly useless as a marketing tool.

I'd want nothing to do with their stock.
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Yeah, that's the business model for taking such a hit on goods/services up front, supposed to be a much more direct marketing tool tho than advertising and hoping to get a % of hits.

But I'm sure I stand with most other groupon customers in saying I've never gone back to a merchant and paid full price for additional goods/services after using one of their groupons.
 
Capt Caveman

Capt Caveman

Lifer
Jan 30, 2005
34,543
651
126
Groupon raises $700 million in massive IPO

(Reuters) - Groupon Inc raised $700 million after increasing the size of its initial public offering, becoming the largest IPO by an Internet company since Google Inc raised $1.7 billion in 2004.

The global leader in "daily deals" is now valued at almost $13 billion after saying it increased the offering by 5 million shares to 35 million in total and pricing them at $20 each, above an initial range of $16 to $18.

The debut of the three-year-old company, which sells Internet coupons for everything from spa treatments to nose jobs, is one of this year's most closely watched. Its tiny float represents just above 5 percent of the company and helped drive up demand and price.

That constraint -- one of the smallest floats of the past decade -- should support Groupon's share price when it begins trading on the Nasdaq on Friday under the ticker GRPN, analysts say.

But in the longer run, they cited concerns about competition from the deep-pocketed likes of Google and Amazon.com Inc; the need to spend continuously to drive user growth; and questions about accounting after the company altered its IPO filings twice to change the way it accounted for revenue.

"Groupon is expensive. The $12.8 billion valuation is only achievable because of the low float," said Rob Romero, head of technology-focused hedge fund firm Connective Capital Management.

"Today's reaction to LinkedIn floating additional share supply is an indication of how tight supply-demand of shares can distort valuation for a new IPO."

LinkedIn, which remains well above its $45 IPO price, plummeted 9 percent after-hours after unveiling a proposal to sell up to $500 million in stock. It had floated 8.3 percent of its shares during the IPO.

Pandora Media, a music streaming service and another recent dotcom debutante, sold 9.2 percent of the company.

At $12.8 billion, Groupon commands a price tag more than twice what Google offered to buy the company last year.

WIDESPREAD CRITICISM

Beyond Friday, Groupon shares may prove volatile on concern about the company's ability to generate long-term profit and revenue growth, plus the likelihood that existing investors will sell some of their holdings at some point.

Quirky music major and CEO Andrew Mason and his executive team spent almost two weeks on the road pitching to investors and addressing widespread criticism about Groupon's replicable business model, slowing growth and accounting concerns.

"The post-IPO investor will be taking a risk on this deal," said Josef Schuster, founder of IPO research and investment house IPOX Schuster. "It's maybe a good trade for a day trader, in and out in a single day, but I don't want to be in it for the long run."

To pull the deal off, the company cut its valuation by about half. Existing shareholders aren't selling. And it skipped meetings with potential investors in Europe and Asia.

If underwriters, led by Morgan Stanley, Goldman Sachs and Credit Suisse, exercise their right to buy just over 5 million more Groupon shares in the IPO, known as the greenshoe, Groupon will raise more than $800 million, before fees.

Wall Street will scrutinize Groupon's Friday showing for clues as to how other highly anticipated dotcom IPOs -- from the likes of Facebook or Zynga -- may fare.

LinkedIn surged on the first day of trading in May and remains far above its $45 IPO price. Pandora's shares surged initially, then slumped. Its shares traded below the $16 IPO price on Thursday at just over $15.

Groupon "is a company with permission to market to 150 million consumers daily. No other company in the world has ever had that type of reach," said Boyan Josic, chief executive atDailyDealMedia, which tracks the industry.

"Investors who truly understand this business model and the position that Groupon has in this market are buying."
Click to expand...
 
kranky

kranky

Elite Member
Oct 9, 1999
21,015
139
106
Groupon "is a company with permission to market to 150 million consumers daily. No other company in the world has ever had that type of reach," said Boyan Josic, chief executive atDailyDealMedia, which tracks the industry.

"Investors who truly understand this business model and the position that Groupon has in this market are buying."
Click to expand...

Like this guy, who makes his living following the daily deal industry(?), is going to say anything that's not effusive praise.

OK, Groupon has the ability to reach 150 million people. Those people have shown they are willing to visit a business as long as the business doesn't make its normal profit on the transaction (yes, oversimplifying a bit). So what is the real value of those 150 million people to the businesses that Groupon sells to? I have Groupon on my cell phone. I check it daily. Since there has never been a deal for places I already go to, I've never bought one. Not a one. There certainly haven't been any must-have deals for places I have never been to.

Do you know why you see so many Groupons for services? Because those are the only businesses who don't lose money with Groupons. They are generally selling time (massages, beauty treatments, etc.). Groupon fills empty appointment slots, so it's better to sell a $60 massage for $15 than to get nothing for an empty time slot.

For businesses who sell merchandise, they can't afford to sell $60 of items for $15. It's an actual loss. You'll see fewer and fewer of those on Groupon. It might be a good idea for a new business that needs to develop awareness that they exist, but how many of those are there.
 
S

spidey07

No Lifer
Aug 4, 2000
65,469
5
76
For a company with such bad press, shaky fundamentals and the stock is doing great is astounding. That it's only offering 5.5% of it's available shares.

Look back at linkedin. Still trading at 80. I wonder how many folks said that was a bust as well? The appetite for internet darlings is still very strong and perception is reality.
 
J

jhu

Lifer
Oct 10, 1999
11,918
9
81
spidey07 said:
For a company with such bad press, shaky fundamentals and the stock is doing great is astounding. That it's only offering 5.5% of it's available shares.

Look back at linkedin. Still trading at 80. I wonder how many folks said that was a bust as well? The appetite for internet darlings is still very strong and perception is reality.
Click to expand...

Until it all comes crumbling down. See 2000-2001
 
ponyo

ponyo

Lifer
Feb 14, 2002
19,688
2,810
126
Groupon is utter trash. You can play musical chair with the stock since the float is so small but wait til the waiting period ends and insiders and early investors start dumping the worthless stock. They're very aware it's a fraud and have limited time to turn their Monopoly money into real money. Look at Mark Cuban. He traded his worthless Broadcast.com stock into billions real dollar by selling out to Yahoo at peak. He knew it was all big fraud. He got paid in Yahoo stock so he bought protective puts til he could sell every share and cash out.
 
Doppel

Doppel

Lifer
Feb 5, 2011
13,306
3
0
I can't pick stocks for SH*T, so take this as you will.

I think Groupon is a joke of a company with a very dubious future. If it's priced at $20/share the value is what, $12B, for a three year old (?) company that actually makes no money?

I know a few people who've tried groupon, myself included, and I'm not the only one who's unsubscribed, because it seems almost all the coupons are just for massages and yoga classes. The quality of coupons is total trash, and apparently a lot of businesses feel they get the sharp end of the sword when they sign-up.

Moreover, they are in an industry extremely hard to defend. Their only competitive advantage is their brand, which is why there are many others that do the same thing. The damn company doesn't even have a patent. IPO is a total gamble.
 
J

Josh

Lifer
Mar 20, 2000
10,917
0
0
cheezy321 said:
Yeah they are so idiotic. Now their company is valued at 3x what google offered them. riiiight :rolleyes:
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...and their early investors/founders cashed out a significant amount of money with venture capital they received so while they wouldn't mind getting much richer, they probably don't really care if the stock tanks and the company goes kaput.
 
Miramonti

Miramonti

Lifer
Aug 26, 2000
28,651
100
91
cliftonite said:
I think so too. What is the best way to profit off this? (expected decline)
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That's a function of risk, but if one doesn't want to short the stock, I'd probably say sell at-the-money call spreads or buy slightly in the money put spreads, sort of the same thing actually. That means if the stock does nothing or goes down, you make money, but have limited risk on the upside.
 
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