

Groupon Shares Plunge, Trading Close to IPO - rgarcia
http://www.bloomberg.com/news/2011-11-22/groupon-shares-plunge-for-second-straight-day-trading-close-to-ipo-price.html

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pathdependent
As an indicator, my short position was closed out on Monday by my broker --
they couldn't find shares to borrow anymore.

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gujk
How does that work? When you short, you immediately sell the shares you
borrowed. Why aren't those shares available to be re-borrowed from the new
owner? The only reason I can guess is that the new owner isn't connected to
the liquidity system, which I would guess would have been a solved problem by
now.

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pathdependent
<http://www.sec.gov/rules/final/2009/34-60388.pdf>

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polyfractal
Was this really a surprise for anyone? The IPO has been a trainwreck since
Groupon decided to start making up financial metrics.

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rythie
If Groupon could cut costs by using a self-serve model (rather than 1000s of
sales staff) it could drastically cut costs and potentially make a large
profit.

Surely at some point in the next few years they will be well known enough for
businesses to go to them, instead of the other way around?

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philwelch
That assumes that Groupon is actually beneficial to the business that does
one.

They also need to manage the "coolness" and variety of offers and write snarky
copy, so self-serve wouldn't necessarily bring it to break-even.

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rythie
In the long term they do need to be beneficial to the businesses that do it,
otherwise they'll die in a few years from word of mouth.

Who writes the copy is an issue, though just someone writing that would be
cheap compared to chasing tons of businesses looking for work and talking to
them all.

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philwelch
The best bet is that they _will_ die in a few years. The fundamental flaws
with their business can't be solved with self-serve.

It's not impossible to survive off the efforts of a predatory sales force
without actually benefitting your customers, but small local businesses aren't
the best prey and you have to actually be able to profit off it it. If you can
spend that much money on salesmen, you're better off making enterprise
software than social coupons.

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feralchimp
"The so-called borrow rate, or fee imposed by brokers on traders who want to
sell short, has dropped to about 30 percent from 99 percent earlier in the
month, Leung said. At 30 percent, Groupon’s shares would have to decline by at
least that much before the trader makes a profit."

I must be missing something...

When I buy shares, I don't get to inform the broker that the stock needs to go
up by 30% before they can execute my trade at today's price.

Betting on a stock to dip 5% seems like a big enough risk that I should be
able to make money on it. 30% just sounds crazy.

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antr
many people have made heaps of money these past days shorting grpn. let's wait
and see what happens by the time the 180 day lock-up expires.

the risk with shorting grpn _today_ is the small free-float given that it's
easy to create demand with small amounts of capital. it's a no brainer that
when the lock-up expires this stock will fall like a brick.

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gujk
If it's a no-brainer, why aren't short sellers flooding the market and driving
down the price to the post-lockup price?

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antr
there is a limited amount of free-float which you can borrow against. the
counter-party needs to purchase that stock, and if a large number of investors
want to short sell the stock, they are indirectly increasing the demand. a
good example is how hedge funds lost eur30bn back in 2008 trying to short sell
overvalued volkswagen stock. i.e. Porsche selling part of its VW stake to ease
a short-squeeze

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mikeryan
Hmm I haven't seen them "plunge". I saw Them spike out the gate and gradually
tail down. Which is pretty much what I expected.

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Rinum
13-14% drop today. That's quite a bit.

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hack_edu
Why so much of a drop today? Has any news come out recently besides the fuzzy
numbers and growing competition?

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LokiSnake
It wasn't so much of a question of why, but when. I don't think any sane
person expected Groupon to stay up there.

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rokhayakebe
Isn't it still up from where it started?

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antr
not really. it wen't public at 26+$/share. only if you had put an order (as an
institutional investor, prior to going public i.e. traded) you would of been
able to get in at $20/share.

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tptacek
Most 2011 tech IPOs are unhappy today. The market is volatile and bearish. In
the absence of news, you can't interpret stuff like this --- especially given
the fact that Groupon doesn't have a listed competitor --- without
understanding where the whole market is at.

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ila
that is no explanation: \- investors do not consider Groupon a tech company
(it's all over the research reports) \- Google, Intel are down marginally (non
retail), Apple is up (tech retail). Nasdaq is ONLY 0.07% down. \- Falling 14%
is intrinsic to the stock, not the market.

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tptacek
Google, Intel, and Apple aren't unproven '11 IPOs. Look at Pandora, Zipcar,
etc.

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ila
I was making a point regarding tech. Groupon is not a technology stock, it
didn't market itself as a tech company. I don't understand how on the one side
you say "Groupon doesn't have a listed competitor" but you want to compare it
to "unproven '11 IPOs. Look at Pandora, Zipcar, etc.". It all sounds to
1+1=5...

