Groupon woes

Admin · #1 28-09-11, 10:15 AM

I wonder if Groupon is regretting not taking the $6 billion offer from Google?

I also wonder if it is the beginning of the end? Just read this on "USA Today":

Quote:

Groupon's woes are mounting. The start-up recently canceled its IPO roadshow. And it is losing boatloads of cash — $223 million in the first half of 2011 alone, according to the filings — as it faces a crush of rivals, including deep-pocketed Google.

The deals giant is also operating without cash. Groupon reported working capital of negative $305 million in the first half of 2011, SEC papers showed. Worse, company executives are cashing out from the $1.1 billion that venture firms invested.

"You see insiders trying to dump the shares," Hamadeh says.

So far, some $946 million has been extracted by insiders who cashed out, filings said. Co-founder Eric Lefkofsky took $319 million from the cash-strapped Groupon, according to the SEC documents.

Full article here: http://www.usatoday.com/money/compan...ble/50548532/1

Shane · #2 28-09-11, 10:33 AM

I don't know much about the inner workings of the deal industry, but I just can't see it being sustainable in its current form.

I have a few friends who run SMEs, and they get approaches from these deal websites all the time. They always tell the reps to piss off, because it's just not worth it for their business.

I'm sure there's room for a couple of deal websites, just like I'm sure there are some businesses that can benefit from the system. What I'm not sure of is how the valuations placed on Groupon and the other deal websites are justifiable, and more importantly, sustainable.

FirstPageResults · #3 28-09-11, 12:22 PM

Quote:

Originally Posted by Shane

I have a few friends who run SMEs, and they get approaches from these deal websites all the time. They always tell the reps to piss off, because it's just not worth it for their business.

From what I've heard (from SMEs), the customers attracted by the vouchers aren't very loyal

Chris.C · #4 28-09-11, 01:08 PM

Yeah a couple of the financial sites I follow have been talking negative about Groupon more of late - the impression I'm getting is that the company is struggling to go from great tech startup to stable and reliable business.

After watching an interview the other day it's not the company isn't grossing revenue - it's about defending it's business and protecting its margins as well as getting and organise, efficient business structure. Some are suggesting that Groupon, especially at the top end of management, are winging it a bit.

When you IPO your company you are selling your future earnings and growth - and obviously being such a young company I think there are lots of investors questioning if Groupon's prospects of future earnings and growth are really there in the same sense that more tangible companies have future earnings and growth prospects.

The thing that might end up biting Groupon in the ass is that Google wasn't really buying the company for its earnings and growth - Google just wanted a doorway into building relationships with SME to leverage it's other more structured, sustainable and profitable assets like AdWords. From this perspective Google's offer may have been the only company that could really leverage Groupon's asset - maybe even more so than Groupon will ever be able to do itself.

As for if $6B will be the most Groupon will ever be worth - only time will tell. If they do get the IPO out thenI think the bigger question will be how long will it's market cap stay above $6B...

Quote:

Originally Posted by Shane

I have a few friends who run SMEs, and they get approaches from these deal websites all the time. They always tell the reps to piss off, because it's just not worth it for their business.

Quote:

Originally Posted by FirstPageResults

From what I've heard (from SMEs), the customers attracted by the vouchers aren't very loyal

Whenever I think of customers using "deals" "vouchers" or "freebies" I just think of the sorts of tight ass customers that Aaron Wall was referring to in this video:

http://www.youtube.com/watch?v=R2a8TRSgzZY

italiandragon · #5 29-09-11, 03:13 AM

more tulips

Chris.C · #6 29-09-11, 01:14 PM

Quote:

Originally Posted by italiandragon

more tulips

Are they of the South Sea variety?

Thread Tools
Show Printable Version Email this Page
Display Modes
Linear Mode Switch to Hybrid Mode Switch to Threaded Mode