

Groupon Sets Nov. 4 IPO - $11.4B - liuwei6
http://online.wsj.com/article/SB10001424052970204618704576644632834963512.html

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edw519

      +----------------------------------+
      | TODAY'S LIVING SOCIAL DAILY DEAL |
      |                                  |
      |     1 Share of Groupon Stock     |
      |                                  |
      |                +---------+       |
      |       $9.00    | BUY NOW |       |
      |                +---------+       |
      |                                  |
      |    50%        224      2 days    | 
      |  savings   purchased  remaining  |
      +----------------------------------+

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sek
When do they expire?

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maukdaddy
In about a year and a half when Groupon files for bankruptcy.

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thematt
Six months. You'll regret buying it as soon as the lockup period expires and
the insiders/VCs are free to cash out.

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vladd
Non-paywall link: [http://www.reuters.com/article/2011/10/21/us-groupon-ipo-
ifr...](http://www.reuters.com/article/2011/10/21/us-groupon-ipo-ifr-
idUSTRE79K3V520111021)

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famousactress
Oh, sweet. Does Groupon remind anyone else of that Simpsons episode where the
monorail salesman comes to town?

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fleitz
It actually reminds me more of a gOvt jobs creation program. But yeah, I'd
short the hell out of this stock. I bet Goldman did the IPO for better info on
pricing the CDS

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effn
Given the transaction costs of credit swaps, it doesn't make sense to trade
them for companies as small as Groupon. That's why there are credit indexes,
and Groupon is not part of any AFACT. They are definitely way too small for
single name credit swaps.

I don't even think they have any outstanding marketable debt instruments.

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melvinng
Sounds like a big ponzi scheme with the stockholders being the last one on the
chain.

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gammarator
The NYT is reporting [1] that Groupon was only (!) $1M from breaking even in
the third quarter, in part because marketing expenses were sharply reduced.

Also, apparently they're not allowing any current shareholders to sell during
the IPO. Fine for Mason and the Lefkofskys, who took a pile of money off the
table early, but if I were an early employee I would be livid.

[1] [http://dealbook.nytimes.com/2011/10/21/groupon-nears-a-
profi...](http://dealbook.nytimes.com/2011/10/21/groupon-nears-a-profit-and-
seeks-16-to-18-a-share/?hpw)

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mjbellantoni
I wonder to what degree the marketing expenses were reduced in order to pretty
up the numbers leading up to the IPO.

It will be interesting to see if their expenditures return to previous levels
after the IPO or if their revenue will suffer from the cutback.

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misterbwong
As far as I can tell, (my unscientific, anecdotal survey of) tech industry
sentiment is that Groupon makes no money and general consumer sentiment is
that they make a decent amount. It will be interesting to see which side wins
out.

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jerf
The tech industry has gone over the financials. The consumer sentiment comes
from the fact that they see it a lot, and therefore it must be making lots of
money. I'm not sure that these two things compare very directly....

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misterbwong
That's kind of the point. I want to see if the tech industry's financial
analysis wins out over general a fuzzy-good feeling in the market.

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paisible
So who will be shorting this ?

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keltex
Most likely the underwriters.

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klochner
Looks like they slowed the marketing spend pre-ipo:

<http://siteanalytics.compete.com/groupon.com/>

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raganwald
Of course they did. Question is, is that “organic” slowing of marketing spend
because they are able to leverage their existing relationships and customer
base to make money? Or is this just a way of making the company appear to lose
less money in the short term to appease the critics?

Now if you’ll excuse me, I have popcorn on the stove, gotta run.

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astrodust
Based on the recent disclosure, even $1 is a high valuation.

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dpapathanasiou
It would be interesting to log the institutional buyers of it (hopefully none
of the funds I own) and track how long they hold it.

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genieyclo
Have they announced the underwriters yet for this IPO? edit: looks like
Goldman Sachs: [http://www.bloomberg.com/news/2011-04-15/groupon-said-to-
cho...](http://www.bloomberg.com/news/2011-04-15/groupon-said-to-choose-
goldman-sachs-morgan-stanley-as-ipo-underwriters.html)

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xefer
I will be shorting this stock

~~~
fennecfoxen
First your broker needs to find someone to borrow it from. The float's only
going to be about 5%. Good luck.

~~~
jamiequint
Alternatively you could buy puts.

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sek
Make entry in calendar: 4.11 Buy popcorn and set up a real time chart.

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fourmii
I'm no stock market expert, bubble or not, it's companies like Groupon who are
making it seem like a bubble is about to burst...

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antr
I'm selling $10 notes for $20. It's a better deal than the Groupon IPO. Anyone
interested?

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0x12
So, someone still wants to argue against this being a bubble?

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gbsi
Run for the money...

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veyron
beat you to it :P <http://news.ycombinator.com/item?id=3139595>

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pitdesi
This is a fascinating thing to watch... IF it IPO's at that amount, all of the
VC's of the last round would have just broken even on their investment -
Morgan Stanley Venture Partners, Fidelity Ventures, Andreessen Horowitz,
Greylock Partners, Kleiner Perkins Caufield & Byers, Maverick Capital, Silver
Lake Partners, Technology Crossover Ventures. Quite a list.

NEA, Brad and Eric make a killing, and Accel and Battery have a decent return
on it.

Incidentally, here is the deck that Groupon uses for their IPO roadshow:
[http://www.retailroadshow.com/sys/launch.asp?qv=945636503631...](http://www.retailroadshow.com/sys/launch.asp?qv=9456365036312491&k=33901366864)

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gyardley
The VCs aren't in the business to break even on their investment. They'll hold
at least some of the stock.

I personally think it'll be a good long-term investment. Connecting online and
offline behavior for small businesses - that's gold. The current state of the
industry might be irrational, but so was internet advertising in the 1990s.

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driverdan
You're assuming they find a way to acquire and retain customers while
eliminating their horrible burn rate.

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ForrestN
<http://www.businessinsider.com/groupon-q3-2011-10>

They seem to be growing while gradually reducing their marketing spend, just
as they said they would while everyone was hemming and hawing about their
"horrible burn rate."

As they've said, the spend was about growing a huge list, which would create
the kind of barrier to entry that so many skeptics have been saying they
desperately need. Now that they have a massive list and are getting closer to
having most of the deal-seekers accounted for, they can slow down on acquiring
new people for the list and focus on converting on the giant list they already
have.

I'm not saying they, or their IPO, will be particularly successful (I have no
idea), but the reactionary criticism that has plagued them surely took a hit
following their filing today.

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wnight
Not my criticism.

For one, their list is public. Nobody else needs to generate leads - and these
are already qualified as being willing to buy a similar service. Simply scrape
the list of companies offering coupons.

Second, they can't enforce a monopoly. Companies will offer coupons through
all available players and keep track of the performance of each individually.
They'll always be actively competed against by competitors who can copy any of
their good ideas without being locked into any of their bad ideas.

Third, deal seekers are notoriously willing to comparison shop. There's
absolutely nothing keeping them at Groupon. All the coupon shoppers I know use
multiple sites, it's part of the fun.

Where's $11B in value?

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ForrestN
How is their list public? I don't know what you mean, but I would be
interested to know more. I wouldn't think they would be allowed to make their
list public.

They don't need a "monopoly" any more than Amazon does; they just need to be
the go-to place that therefor gets the broadest range of good deals, has the
most relationships, the biggest list, etc.

people can comparison shop to an extent, but so what. Again, I can look at
ecommerce sites besides Amazon. But as they grew and became synonymous with
their category, more and more reasons not to waste time elsewhere stacked up.
Who knows if Groupon Now or Products or whatever else will be successful, but
it seems like they are spending a lot of time and energy building stuff to
make it harder to compete with them, yet at the same time being attacked for
not being profitable enough yet.

~~~
wnight
Their specific mailing list isn't public, but the list of their customers is,
inherently, and anyone can call and ask for the person in charge of coupons.
And it's not an either-or thing, so it's a trivial sale.

Businesses will offer better deals through companies that cost less to use.
Groupon's cut limits how good the deal can be for the customer, and is money
that could be spent on more effective targeted advertising.

Groupon is actually harder to use than traditional coupons, for business and
consumer. With traditional coupons you take it in, or print it, or take a
picture of it, and present it for your reward. With Groupon you have to put
out money up front and businesses don't get it till later. Good for Groupon,
not at all useful for anyone else.

Buying a TV from amazon is a different type of purchase than buying a coupon,
especially because many coupons are free. Coupon shoppers will subscribe to
any list they see that offers a good deal.

They aren't being attacked for not being profitable, they're being attacked
for valuing themselves at _over eleven billion dollars_ despite not having
been out of the red, let alone healthily in the black.

Their value, considered rationally, is what it would cost to technically
recreate them, plus the value in their name and customer list. The later is
available, the former is in the ballpark of $300K-$2M, and their name isn't
worth $11 billion no matter how you look at it.

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lhnn
Who's buying puts?

