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Groupon is a consumer-facing company, with a large percentage of its offerings in the discretionary category. As it so happens, the American consumer is getting

Groupon is a consumer-facing company, with a large percentage of its offerings in the discretionary category. As it so happens, the American consumer is getting clobbered and has less time/money for discretionary spending. LinkedIn is in an interesting spot, because the job market sucks so badly, and unemployment remains high (which, when you think about it, could go either way for LinkedIn). Sure, there may be some macro factors about the set of "newly IPOed companies" that are going into their sell-off. But by and large, there are plenty of rational reasons why the market for both of these companies' shares is in a tough spot.

jcampbell1 15y ago
Doesn't the majority of LinkedIn's revenue come from recruiters? It makes sense that LinkedIn, Zillow, and Pandora are off more than the market as recruiting, ads, and real estate tend to get hit harder than the broader economy. Groupon was born during the recession, so may fare better than others. Deep discounting and coupons are counter-cyclical.
- jonnathanson 15y ago
  "Deep discounting and coupons are counter-cyclical" Not if they're mostly (or even significantly) in discretionary categories and experiences, though. You could offer me 90% off a tennis lesson, or 99% off a trial run of Invisalign braces, but if I'm struggling to make ends meet on the basics, such offers are of little use to me. In fairness, I have no idea what percentage of Groupon's offers are discretionary. (Though, anecdotally, it sure seems like a big number). But my point is that I wouldn't put it past many analysts to assume that it's a significant percentage. And that's all you need to move the price of the stock.
  - jcampbell1 15y ago
    I don't think the term "discretionary", captures what happens during a recession in the first world. I mean, when unemployment goes from 6% to 9%, 3% of the population stops going out for dinner, and 70% of the population cuts back on spending based on fear. That 70% of the population starts cutting coupons and buying generic products, and shops at Walmart instead of Whole Foods. Fashion industries get hit hard, but entertainment generally doesn't. I really think the "deals" or "coupon" space is counter-cyclical no matter whether the coupons are for skydiving or pickles. I personally don't have a gut instinct for this space, as I am not a customer of Groupon, but I am interested in the question "If you neighbor lost his job, would you buy more or less Groupons?".

jcampbell1 15y ago

Doesn't the majority of LinkedIn's revenue come from recruiters? It makes sense that LinkedIn, Zillow, and Pandora are off more than the market as recruiting, ads, and real estate tend to get hit harder than the broader economy. Groupon was born during the recession, so may fare better than others. Deep discounting and coupons are counter-cyclical.

jonnathanson 15y ago
"Deep discounting and coupons are counter-cyclical" Not if they're mostly (or even significantly) in discretionary categories and experiences, though. You could offer me 90% off a tennis lesson, or 99% off a trial run of Invisalign braces, but if I'm struggling to make ends meet on the basics, such offers are of little use to me. In fairness, I have no idea what percentage of Groupon's offers are discretionary. (Though, anecdotally, it sure seems like a big number). But my point is that I wouldn't put it past many analysts to assume that it's a significant percentage. And that's all you need to move the price of the stock.
- jcampbell1 15y ago
  I don't think the term "discretionary", captures what happens during a recession in the first world. I mean, when unemployment goes from 6% to 9%, 3% of the population stops going out for dinner, and 70% of the population cuts back on spending based on fear. That 70% of the population starts cutting coupons and buying generic products, and shops at Walmart instead of Whole Foods. Fashion industries get hit hard, but entertainment generally doesn't. I really think the "deals" or "coupon" space is counter-cyclical no matter whether the coupons are for skydiving or pickles. I personally don't have a gut instinct for this space, as I am not a customer of Groupon, but I am interested in the question "If you neighbor lost his job, would you buy more or less Groupons?".