
Groupon Prices I.P.O. at $20 a Share - donohoe
http://dealbook.nytimes.com/2011/11/03/groupon-prices-i-p-o-at-20-a-share/?hp
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hugh3
I don't know why the "per share" price is the headline number here -- what
matters is the total valuation, which is $12.65 billion.

Dunno about you, but I'm not gonna be buying at that price.

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Macsenour
I don't argue with $12.65, it's the "billion" added at the end that makes me
scratch my head.

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kylec
Honestly, $12.65 might be too much too - the company has built up some pretty
serious liabilities the way the deal payouts are structured.

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jerf
Putting aside the questionable nature of Groupon's IPO discussed ad nauseum
here, this trick of only selling a very small part of the company in the IPO
to keep price high by restricting supply seems, for lack of a better word,
strange. So, I buy some stock at a price inflated by the lack of supply as the
company puts 5% of itself out there. For the supply-restricted price to make
sense, though, I have to believe that either the supply is never going to be
expanded by the company putting more pieces of itself out there on the market,
or that I'll get mine in dividends before that happens. (Or that I can unload
it on another sucker, but for the sake of analysis I'm trying to discuss the
real value in terms of dividends and percentage of company owned rather than
the gambling side.)

Well, _obviously_ I'm not seeing any dividends any time soon for something
like Groupon. What happens when more of the stock trickles on to the market?
(How much of the company will become available as employee stock options?) Or
if Groupon puts another 5% out there? What happens when the supply expands?

It seems like this is the sort of trick that's only going to work for a little
while.

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byrneseyeview
That argument is sort of like a chess strategy that starts with "If I get four
moves in a row, I can checkmate my opponent."

Nobody is denying the basic facts you've cited, so it'll be very hard for you
to find someone whose ignorance of those facts you can use to your advantage.
Groupon won't be as liquid as, e.g., AMZN. But buyers and sellers both know
that.

And selling pressure is intrinsically short-term; Groupon's underlying value
is completely independent of the number and motivation of selling
shareholders. In a Bayesian sense, you could respond to insider selling--
except that insiders are almost always selling, and the more successful the
company is, the more they ought to sell. The biggest insider sellers are, by
necessity, the founders of the biggest and most successful companies.

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jerf
I would think something more like "If my opponent is going to get four moves
in a row, why should I play?" is more what I was going for. I'm not trying to
screw other people over, I'm trying to figure out why I'd play this game at
all.

I'm as big a believer as you're going to find in rational markets, but that
entails also knowing that in point of fact they can often be quite irrational
by exploiting various human irrationalities, such as using past experience
when we really shouldn't. Big fund managers aren't even remotely immune to
this. This strategy of selling such a small portion of the company on the
market feels like a way of exploiting the fact that "everybody knows" these
big tech stocks "always" explode and exploiting the demand that is higher than
it should be, while in fact selling hardly anything of value at all.
Arbitraging the belief that tech stocks can't help but pull a Google,
basically.

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mog_man
Manipulation Manipulation Manipulation.

Manipulation of the worth of the services on the coupons. Manipulation of the
SEC IPO filings. Manipulation of the IPO timing. Picking a mini bull run to
IPO. Manipulation of the financial statements. Sacrificing user acquisition to
balance the books.

A company with a sound business doesn't require this much manipulation to
operate.

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hack_edu
IPO or not, we still won't be talking about them in 5 years.

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pbreit
Of all the naysayers, the Hacker News community seemed to be one of the most
consistent. I'm curious why that is? Is it because Groupon doesn't look
ostensibly too technical? Is it a general disdain for commercial success? Is
it for perceived arrogance? Is it a lack of business acumen?

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hugh3
Wow, now there's a loaded question. Why don't you just ask us whether we're
gonna stop beating our wives?

The reasons to be skeptical of Groupon are well documented. Not that it's a
bad business, by any means, it's just that it's an industry with low barriers
to entry and many competitors, and Groupon's early success is unsustainable
since it was built on persuading businesses to offer ridiculously good deals
which are likely to lose them money; businesses are wising up to this, deals
are getting worse, people are getting less interested, and in general the
whole social-coupon industry seems to be settling into a new equilibrium in
which a $10^10 valuation for Groupon seems excessive.

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byrneseyeview
I used to think it was an industry with low barriers to entry, as did lots of
people who have lost lots of money on Groupon clones. I'm not sure why, but it
turns out to be a really tough business for all but a few companies.

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Woost
Groupon's business is basically all sales and marketing. The v1 tech behind
the deal-a-day offerings is trivial. (leaving aside recommendations and such)

You need to be _very_ good at signing up businesses and getting good terms for
your company to succeed. In addition, you need to figure out how to get a
stable base of customers of your site.

Basically, Groupon clones have very low technical barriers to entry, but if
you don't have a really good sales and marketing staff you're in trouble.

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mhartl
The headline only means anything because of the convention restricting IPO
share prices to a fairly narrow range. The more relevant number appears in the
fourth paragraph:

 _The stock sale values the company at $12.65 billion._

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gojomo
I predict that much like Demand Media [DMD], Groupon [GRPN] will be at less
than half its IPO price within one year.

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pbreit
There's at leat one major difference in my mind: I and many people I know use
and like Groupon (both consumers and merchants). No one I know, including me,
use or like Demand Media.

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fleitz
How long until they have to start selling it via their site at a discount?

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benackles
The comments are much more interesting than the news. 100% negative public
sentiment on the most inflated IPO of the year. That can't be a good sign.

