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I don't know if this info is limited to tech communities or what... Is the general consensus that this IPO seems very scammy outside of the tech world?

by suking 15y ago

bcrescimanno 15y ago
I think it's mostly the general consensus--period. This has boiler-room style "pump and dump" written all over it; yet the big investment banks have been getting away with running IPOs this way for years. Groupon just happens to be the latest example.
- suking 15y ago
  I just keep thinking how many terrible articles can be written about them before the IPO is scrapped. Their numbers are a joke.
  - kennystone 15y ago
    They can't scrap it. They are bleeding cash.
    - ChuckMcM 15y ago
      Actually they can, and yes they are bleeding cash and yes they are 'upside down' in the parlance, but if they lower the offering price and still can't get it fully subscribed they are stuck. They can go back to their investors for a bridge loan, or issue warrants, or try another private (probably down) round. Two very interesting things have come out of Groupon's history so far, the first is that they turned down a $6B buyout (which seemed amazing to me at the time) and then they did a fund raise where most of the stock was insiders selling. That particular combination makes me wonder if the buyout was rejected because the way money would have been shared around was stipulated by previous term agreements, and some of the investors didn't want that, so they did the series D or what ever it was which allowed them to funnel money to specific investors, so that now if they take a hair cut on valuation those investors are 'protected.' So the fact that they are bleeding cash will force some sort of financial transaction to occur (buyout, bridge loan, chapter 11 bankruptcy), if they are having a hard time getting the offering fully subscribed they may be shopping the company around, and if they are doing that they are in a much weaker position than they were before.
- ookblah 15y ago
  Do you think that us living in this time period would help mitigate that? I mean back in 2000 I was too young to understand all that, but was the bubble partly due to misinformation by of the public? I feel like with all these stories about the IPO being cast in a negative light, and how connected we are now w/ information, the average person would be much more careful. Hm.
  - ssmoot 15y ago
    I remember the dot-coms. I wouldn't say I was all that savvy then (or now), but my take is it feels very similar now. It really didn't seem like there was a lot of out-right deception then, or even misinformation. Companies will always say they're great. There's enough information out there to inspire some skepticism if you're open to it. I'm no professional at this, but my uneducated observation is that, then and now, there's a lot of money to be made, and people are willing to risk riding the wave as long as they think they can get out before the crash. It's just simple greed. Nobody really believes these companies are actually worth what they're being pitched at; but "if I can quickly double or quadruple my investment, then get out clean, why should I miss out? After all, I'm smarter than everyone else..."
    - rickmode 15y ago
      You've described the very definition of the "greater fool theory" [1]. This is investing based on momentum rather than value (such as the price to earnings ratio). The intent is to sell to another "fool" after mading a profit. Of course it all comes tumbling down when the market runs out of fools [2]. [1] http://en.wikipedia.org/wiki/Greater_fool_theory http://en.wikipedia.org/wiki/Greater_fool_theory [2] http://en.wikipedia.org/wiki/Tulip_mania http://en.wikipedia.org/wiki/Tulip_mania
      - chopsueyar 15y ago
        More to the point... http://en.wikipedia.org/wiki/Exit_strategy http://en.wikipedia.org/wiki/Exit_strategy
  - mixmax 15y ago
eli 15y ago
I think every story I heard or read on the IPO at least mentioned the fact that they seem to be losing a fair bit of money.

I don't know if this info is limited to tech communities or what... Is the general consensus that this IPO seems very scammy outside of the tech world?

by suking 15y ago

I don't know if this info is limited to tech communities or what... Is the general consensus that this IPO seems very scammy outside of the tech world?

bcrescimanno 15y ago

I think it's mostly the general consensus--period. This has boiler-room style "pump and dump" written all over it; yet the big investment banks have been getting away with running IPOs this way for years. Groupon just happens to be the latest example.

suking 15y ago
I just keep thinking how many terrible articles can be written about them before the IPO is scrapped. Their numbers are a joke.
- kennystone 15y ago
  They can't scrap it. They are bleeding cash.
  - ChuckMcM 15y ago
    Actually they can, and yes they are bleeding cash and yes they are 'upside down' in the parlance, but if they lower the offering price and still can't get it fully subscribed they are stuck. They can go back to their investors for a bridge loan, or issue warrants, or try another private (probably down) round. Two very interesting things have come out of Groupon's history so far, the first is that they turned down a $6B buyout (which seemed amazing to me at the time) and then they did a fund raise where most of the stock was insiders selling. That particular combination makes me wonder if the buyout was rejected because the way money would have been shared around was stipulated by previous term agreements, and some of the investors didn't want that, so they did the series D or what ever it was which allowed them to funnel money to specific investors, so that now if they take a hair cut on valuation those investors are 'protected.' So the fact that they are bleeding cash will force some sort of financial transaction to occur (buyout, bridge loan, chapter 11 bankruptcy), if they are having a hard time getting the offering fully subscribed they may be shopping the company around, and if they are doing that they are in a much weaker position than they were before.
ookblah 15y ago
Do you think that us living in this time period would help mitigate that? I mean back in 2000 I was too young to understand all that, but was the bubble partly due to misinformation by of the public? I feel like with all these stories about the IPO being cast in a negative light, and how connected we are now w/ information, the average person would be much more careful. Hm.
- ssmoot 15y ago
  I remember the dot-coms. I wouldn't say I was all that savvy then (or now), but my take is it feels very similar now. It really didn't seem like there was a lot of out-right deception then, or even misinformation. Companies will always say they're great. There's enough information out there to inspire some skepticism if you're open to it. I'm no professional at this, but my uneducated observation is that, then and now, there's a lot of money to be made, and people are willing to risk riding the wave as long as they think they can get out before the crash. It's just simple greed. Nobody really believes these companies are actually worth what they're being pitched at; but "if I can quickly double or quadruple my investment, then get out clean, why should I miss out? After all, I'm smarter than everyone else..."
  - rickmode 15y ago
    You've described the very definition of the "greater fool theory" [1]. This is investing based on momentum rather than value (such as the price to earnings ratio). The intent is to sell to another "fool" after mading a profit. Of course it all comes tumbling down when the market runs out of fools [2]. [1] http://en.wikipedia.org/wiki/Greater_fool_theory http://en.wikipedia.org/wiki/Greater_fool_theory [2] http://en.wikipedia.org/wiki/Tulip_mania http://en.wikipedia.org/wiki/Tulip_mania
    - chopsueyar 15y ago
      More to the point... http://en.wikipedia.org/wiki/Exit_strategy http://en.wikipedia.org/wiki/Exit_strategy
- mixmax 15y ago

eli 15y ago

I think every story I heard or read on the IPO at least mentioned the fact that they seem to be losing a fair bit of money.