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Is it running on fumes? They still have significant revenues and loyal customers and a million sales people.

adventured 11y ago
It's not running on fumes. It would have been more accurate to say that it is growing more slowly (and as of the last few quarters, has seen its growth flat-line). 2012: $2.33b in sales 2013: $2.57b in sales 2014: $3.19b in sales Their biggest problem is the inability to achieve profitability on $3 billion in sales after so many years in business. They still have $1.1 billion in cash however, and have reduced their bleed rate to a benign level.
- fredkbloggs 11y ago
  > Their biggest problem is the inability to achieve profitability on $3 billion in sales after so many years in business. They still have $1.1 billion in cash however Doesn't this just mean the investors would be better off winding it down and investing the $1.1b in something that is profitable, or at the very least has a higher ceiling? It doesn't seem all that likely that the latest round of cutbacks is going to turn this into a profitable company and even if it does, the scope for profits is very limited. As you say, they've been going for a long time and nothing is really getting better. Even the 2.5% you get from the S&P 500 would be a better use for that billion in cash.
  - astrodust 11y ago
    Sadly, a lot of tech companies would perform better if they threw their cash into index-driven mutual funds.
    - smeyer 11y ago
      By virtue of the way indices work, a lot of public companies in general would have been better off throwing their cash in index-driven mutual funds. That being said, if it were easy to tell ahead of time which these companies are, it would be easy as an investor to beat index-driven mutual funds.
    - bduerst 11y ago
      And they would risk losing investors. Why would someone put money into a company that invests in index-funds, when you can just invest in index-funds?
      - fredkbloggs 11y ago
        Right. That's why I suggested Groupon be wound down, not that they continue operating at a loss but invest their cash differently. This does raise an interesting question, though. There seem to be a lot of corporations out there that have no obvious reason for existing: minimal to negative profitability on a sustained basis, uninspiring business with little potential, and a long track record that doesn't suggest a turnaround is likely. Groupon is just one of many. Presumably in many cases, equity in these corporations is held primarily or even entirely by index funds. Why should such a company remain in business? By definition, if all your shareholders are indexers, there is not a single person alive who considers you an above-average investment. In a rational market, such a company would be wound down or the price of its shares would fall so low that it would be taken over by someone who believes he can do better. But the index funds create a sort of circular reasoning, or perhaps an isolated reality separated from outside feedback, allowing these zombies to keep living. A variant of this was covered by http://www.bloombergview.com/articles/2015-07-22/index-funds-may-work-a-little-too-well http://www.bloombergview.com/articles/2015-07-22/index-funds..., but this seems like a more extreme case. Of course, Groupon's "institutional ownership", which includes various active and passive funds, pensions, endowments, etc. is only 65% per Google Finance. There are corporations with 100% and even >100% institutional ownership (i.e., there are a lot of non-institutional shorts). Why do they continue to exist, and what can be done to kill them off?
kardos 11y ago
They don't have a million sales people -_-, 11.8k employees total is a better estimate [1], dropping to 10.7k soon. Maybe fumes was not the right word. The things they offer as "deals" are fumes. I just loaded the Toronto section, and saw "$179 for $2392 worth of laser hair removal" with >200 sold. I don't believe that the $2392 figure is not grossly inflated. Also "$430 for a $899 iPhone", but then you notice "condition: refurbished". These things don't come across as credible promotions, but rather the result of someone packaging something up to appear to be a promotion, but it's just a normal price disguised in some way. Perhaps there are some actual promotions on there, but these pseudo-promotions reduce the credibility as a whole. So what's special about groupon again? I can get normal price things anytime/anywhere, and not have to go through the hassle of buying the coupon in a specific time frame, and only be able to use it in a different specific time frame and another dozen restrictions. [1] http://www.bloomberg.com/research/stocks/snapshot/snapshot.asp?ticker=GRPN http://www.bloomberg.com/research/stocks/snapshot/snapshot.a...
- deleted 11y ago
  [deleted]

It's not running on fumes. It would have been more accurate to say that it is growing more slowly (and as of the last few quarters, has seen its growth flat-line). 2012: $2.33b in sales 2013: $2.57b in sales 2014: $3.19b in sales Their biggest problem is the inability to achieve profitability on $3 billion in sales after so many years in business. They still have $1.1 billion in cash however, and have reduced their bleed rate to a benign level.

fredkbloggs 11y ago
> Their biggest problem is the inability to achieve profitability on $3 billion in sales after so many years in business. They still have $1.1 billion in cash however Doesn't this just mean the investors would be better off winding it down and investing the $1.1b in something that is profitable, or at the very least has a higher ceiling? It doesn't seem all that likely that the latest round of cutbacks is going to turn this into a profitable company and even if it does, the scope for profits is very limited. As you say, they've been going for a long time and nothing is really getting better. Even the 2.5% you get from the S&P 500 would be a better use for that billion in cash.
- astrodust 11y ago
  Sadly, a lot of tech companies would perform better if they threw their cash into index-driven mutual funds.
  - smeyer 11y ago
    By virtue of the way indices work, a lot of public companies in general would have been better off throwing their cash in index-driven mutual funds. That being said, if it were easy to tell ahead of time which these companies are, it would be easy as an investor to beat index-driven mutual funds.
  - bduerst 11y ago
    And they would risk losing investors. Why would someone put money into a company that invests in index-funds, when you can just invest in index-funds?
    - fredkbloggs 11y ago
      Right. That's why I suggested Groupon be wound down, not that they continue operating at a loss but invest their cash differently. This does raise an interesting question, though. There seem to be a lot of corporations out there that have no obvious reason for existing: minimal to negative profitability on a sustained basis, uninspiring business with little potential, and a long track record that doesn't suggest a turnaround is likely. Groupon is just one of many. Presumably in many cases, equity in these corporations is held primarily or even entirely by index funds. Why should such a company remain in business? By definition, if all your shareholders are indexers, there is not a single person alive who considers you an above-average investment. In a rational market, such a company would be wound down or the price of its shares would fall so low that it would be taken over by someone who believes he can do better. But the index funds create a sort of circular reasoning, or perhaps an isolated reality separated from outside feedback, allowing these zombies to keep living. A variant of this was covered by http://www.bloombergview.com/articles/2015-07-22/index-funds-may-work-a-little-too-well http://www.bloombergview.com/articles/2015-07-22/index-funds..., but this seems like a more extreme case. Of course, Groupon's "institutional ownership", which includes various active and passive funds, pensions, endowments, etc. is only 65% per Google Finance. There are corporations with 100% and even >100% institutional ownership (i.e., there are a lot of non-institutional shorts). Why do they continue to exist, and what can be done to kill them off?

kardos 11y ago

They don't have a million sales people -_-, 11.8k employees total is a better estimate [1], dropping to 10.7k soon. Maybe fumes was not the right word. The things they offer as "deals" are fumes. I just loaded the Toronto section, and saw "$179 for $2392 worth of laser hair removal" with >200 sold. I don't believe that the $2392 figure is not grossly inflated. Also "$430 for a $899 iPhone", but then you notice "condition: refurbished". These things don't come across as credible promotions, but rather the result of someone packaging something up to appear to be a promotion, but it's just a normal price disguised in some way. Perhaps there are some actual promotions on there, but these pseudo-promotions reduce the credibility as a whole. So what's special about groupon again? I can get normal price things anytime/anywhere, and not have to go through the hassle of buying the coupon in a specific time frame, and only be able to use it in a different specific time frame and another dozen restrictions. [1] http://www.bloomberg.com/research/stocks/snapshot/snapshot.asp?ticker=GRPN http://www.bloomberg.com/research/stocks/snapshot/snapshot.a...

deleted 11y ago
[deleted]