4 ms·

You could probably take your pick of overvalued companies from the 1997-1999 dot com era. Even if we are in another boom period, Groupon has the revenue, growth

by c2 16y ago

You could probably take your pick of overvalued companies from the 1997-1999 dot com era. Even if we are in another boom period, Groupon has the revenue, growth, P/E, and market potential to justify the high price tag, unlike it's boom counterparts Twitter and Facebook. If Facebook and Groupon both IPO'd tomorrow, something tells me Groupon would have the higher market cap, and without looking at numbers, my hunch is it would be the better long term investment too. Remember, Facebook is already over the uncanny valley - they have 500 million users, and starting to enter a saturated market. Groupon is still relatively small and has a long way to grow.

btilly 16y ago
If Facebook and Groupon both IPO'd tomorrow, something tells me Groupon would have the higher market cap... Sorry, you're wrong. Google purportedly just offered Groupon $5 billion. That's my best estimate of Groupon's probable market cap. SecondMarket just did an auction of stock in a company whose sole asset are some shares in Facebook. Based on this, my best estimate of Facebook's market cap is $50 billion. (See http://www.pcmag.com/article2/0,2817,2373614,00.asp http://www.pcmag.com/article2/0,2817,2373614,00.asp for more on that auction.)
- c2 16y ago
  Groupon also turned them down, so what does that mean? I guess we'll just have to wait and see, huh? Secondary markets don't mean anything, let's see if the big investment banks, pension funds, and the real market movers are going to appreciate Facebook's tiny margins and slowing growth. Again, I don't have the numbers, and no one outside of direct involvement with Facebook (or Groupon) does either, but with the numbers being thrown around, Groupon has so far demonstrated much more capability for running a fast growing, profitable, high margin business.
- philwelch 16y ago
  If Facebook and Groupon both went public on Monday, Facebook would have a higher IPO. But in the space of a year or two, Groupon would have the higher market cap. Facebook's valuation is based on a lot of hype and not very much revenue potential. Groupon's valuation is far more likely to survive sober, realistic analysis outside of the Valley echo chamber.
  - puredemo 16y ago
    Or the coupon thing is just a novelty that people will get tired of, for one of any number of reasons.
  - benofsky 16y ago
    Little revenue potential? That's a crazy thing to say, anyone with 600 million users has a fairly decent revenue potential... Now what about when you know every single detail about those 600 million people's lives... HUGE revenue potential.
    - philwelch 16y ago
      It doesn't matter how many users you have or how much information you have if you can't monetize it, especially when you have to categorically rule out all the obvious options (charge people money to use the service, sell people's private information) and other feasible options (sell devices designed to integrate with Facebook) are instantly shot down by the company's own efforts (free iPhone and Android apps). Maybe Facebook will find a way to make tons of money, rather than merely tons of hype. As it stands, I bet the number of users they have represents high cost rather than high revenue potential. It's definitely too big to go away, but unlike Groupon, it also hasn't found a way to make tons of money yet, and no method to do that seems forthcoming.

by c2 16y ago

btilly 16y ago

If Facebook and Groupon both IPO'd tomorrow, something tells me Groupon would have the higher market cap... Sorry, you're wrong. Google purportedly just offered Groupon $5 billion. That's my best estimate of Groupon's probable market cap. SecondMarket just did an auction of stock in a company whose sole asset are some shares in Facebook. Based on this, my best estimate of Facebook's market cap is $50 billion. (See http://www.pcmag.com/article2/0,2817,2373614,00.asp http://www.pcmag.com/article2/0,2817,2373614,00.asp for more on that auction.)

c2 16y ago
Groupon also turned them down, so what does that mean? I guess we'll just have to wait and see, huh? Secondary markets don't mean anything, let's see if the big investment banks, pension funds, and the real market movers are going to appreciate Facebook's tiny margins and slowing growth. Again, I don't have the numbers, and no one outside of direct involvement with Facebook (or Groupon) does either, but with the numbers being thrown around, Groupon has so far demonstrated much more capability for running a fast growing, profitable, high margin business.
philwelch 16y ago
If Facebook and Groupon both went public on Monday, Facebook would have a higher IPO. But in the space of a year or two, Groupon would have the higher market cap. Facebook's valuation is based on a lot of hype and not very much revenue potential. Groupon's valuation is far more likely to survive sober, realistic analysis outside of the Valley echo chamber.
- puredemo 16y ago
  Or the coupon thing is just a novelty that people will get tired of, for one of any number of reasons.
- benofsky 16y ago
  Little revenue potential? That's a crazy thing to say, anyone with 600 million users has a fairly decent revenue potential... Now what about when you know every single detail about those 600 million people's lives... HUGE revenue potential.
  - philwelch 16y ago
    It doesn't matter how many users you have or how much information you have if you can't monetize it, especially when you have to categorically rule out all the obvious options (charge people money to use the service, sell people's private information) and other feasible options (sell devices designed to integrate with Facebook) are instantly shot down by the company's own efforts (free iPhone and Android apps). Maybe Facebook will find a way to make tons of money, rather than merely tons of hype. As it stands, I bet the number of users they have represents high cost rather than high revenue potential. It's definitely too big to go away, but unlike Groupon, it also hasn't found a way to make tons of money yet, and no method to do that seems forthcoming.