5 ms·

Groupon Shares Plunge, Trading Close to IPO

50 points by rgarcia 15y ago

mikeryan 15y ago
Hmm I haven't seen them "plunge". I saw Them spike out the gate and gradually tail down. Which is pretty much what I expected.
- Rinum 15y ago
  13-14% drop today. That's quite a bit.
- deleted 15y ago
  [deleted]
hack_edu 15y ago
Why so much of a drop today? Has any news come out recently besides the fuzzy numbers and growing competition?
- LokiSnake 15y ago
  It wasn't so much of a question of why, but when. I don't think any sane person expected Groupon to stay up there.
- radicaldreamer 15y ago
  Markets don't act rationally day to day. In fact, many think that markets are only rational at spot moments and that irrationality is their default state.
polyfractal 15y ago
Was this really a surprise for anyone? The IPO has been a trainwreck since Groupon decided to start making up financial metrics.
feralchimp 15y ago
"The so-called borrow rate, or fee imposed by brokers on traders who want to sell short, has dropped to about 30 percent from 99 percent earlier in the month, Leung said. At 30 percent, Groupon’s shares would have to decline by at least that much before the trader makes a profit." I must be missing something... When I buy shares, I don't get to inform the broker that the stock needs to go up by 30% before they can execute my trade at today's price. Betting on a stock to dip 5% seems like a big enough risk that I should be able to make money on it. 30% just sounds crazy.
- deleted 15y ago
  [deleted]
  - lell 15y ago
    I really wanted to short this ticker during the IPO, but I was worried that I would have had to pay dividends that would go over my budget and I'd have to give up the positions before they were profitable, or that I'd accidently get futures instead of options (and potentially lose an arbitrary amount of money overnight). Does anyone know how one could have gone about shorting this in a way that made money with a budget of say $2500, (i.e., in a way that would have incurred a maximum loss of $2500) given what happened?
    - jmvoodoo 15y ago
      Buy put options.
    - dankohn1 15y ago
      Buy $2500 worth of puts. You would have large upside and could lose at most what you paid or the put. Of course, The time decay works against you, but that wouldn't matter given the swings you're expecting.
    - AndyIngram 15y ago
      It would be highly unlikely for Groupon to issue a dividend, but shorting does have risks you need to educate yourself on if you are going to attempt it. I have a feeling options particularly put options would be priced highly at this time so a better choice could be to do a bearish call spread. http://www.optionsxpress.com/free_education/strategies/bear_call_spread.aspx http://www.optionsxpress.com/free_education/strategies/bear_...
rokhayakebe 15y ago
Isn't it still up from where it started?
- bryanh 15y ago
  Yes, about 2-3% above $20, the stated IPO.
- antr 15y ago
  not really. it wen't public at 26+$/share. only if you had put an order (as an institutional investor, prior to going public i.e. traded) you would of been able to get in at $20/share.
tptacek 15y ago
Most 2011 tech IPOs are unhappy today. The market is volatile and bearish. In the absence of news, you can't interpret stuff like this --- especially given the fact that Groupon doesn't have a listed competitor --- without understanding where the whole market is at.
- ila 15y ago
  that is no explanation: - investors do not consider Groupon a tech company (it's all over the research reports) - Google, Intel are down marginally (non retail), Apple is up (tech retail). Nasdaq is ONLY 0.07% down. - Falling 14% is intrinsic to the stock, not the market.
  - tptacek 15y ago
    Google, Intel, and Apple aren't unproven '11 IPOs. Look at Pandora, Zipcar, etc.
    - ila 15y ago
      I was making a point regarding tech. Groupon is not a technology stock, it didn't market itself as a tech company. I don't understand how on the one side you say "Groupon doesn't have a listed competitor" but you want to compare it to "unproven '11 IPOs. Look at Pandora, Zipcar, etc.". It all sounds to 1+1=5...
pathdependent 15y ago
As an indicator, my short position was closed out on Monday by my broker -- they couldn't find shares to borrow anymore.
- radicaldreamer 15y ago
  Might be time to go long then.
- gujk 15y ago
  How does that work? When you short, you immediately sell the shares you borrowed. Why aren't those shares available to be re-borrowed from the new owner? The only reason I can guess is that the new owner isn't connected to the liquidity system, which I would guess would have been a solved problem by now.
  - pathdependent 15y ago
    http://www.sec.gov/rules/final/2009/34-60388.pdf http://www.sec.gov/rules/final/2009/34-60388.pdf
rythie 15y ago
If Groupon could cut costs by using a self-serve model (rather than 1000s of sales staff) it could drastically cut costs and potentially make a large profit. Surely at some point in the next few years they will be well known enough for businesses to go to them, instead of the other way around?
- philwelch 15y ago
  That assumes that Groupon is actually beneficial to the business that does one. They also need to manage the "coolness" and variety of offers and write snarky copy, so self-serve wouldn't necessarily bring it to break-even.
  - rythie 15y ago
    In the long term they do need to be beneficial to the businesses that do it, otherwise they'll die in a few years from word of mouth. Who writes the copy is an issue, though just someone writing that would be cheap compared to chasing tons of businesses looking for work and talking to them all.
    - philwelch 15y ago
      The best bet is that they will die in a few years. The fundamental flaws with their business can't be solved with self-serve. It's not impossible to survive off the efforts of a predatory sales force without actually benefitting your customers, but small local businesses aren't the best prey and you have to actually be able to profit off it it. If you can spend that much money on salesmen, you're better off making enterprise software than social coupons.

50 points by rgarcia 15y ago

Hmm I haven't seen them "plunge". I saw Them spike out the gate and gradually tail down. Which is pretty much what I expected.

Rinum 15y ago
13-14% drop today. That's quite a bit.
deleted 15y ago
[deleted]

hack_edu 15y ago

Why so much of a drop today? Has any news come out recently besides the fuzzy numbers and growing competition?

LokiSnake 15y ago
It wasn't so much of a question of why, but when. I don't think any sane person expected Groupon to stay up there.
radicaldreamer 15y ago
Markets don't act rationally day to day. In fact, many think that markets are only rational at spot moments and that irrationality is their default state.

polyfractal 15y ago

Was this really a surprise for anyone? The IPO has been a trainwreck since Groupon decided to start making up financial metrics.

feralchimp 15y ago

"The so-called borrow rate, or fee imposed by brokers on traders who want to sell short, has dropped to about 30 percent from 99 percent earlier in the month, Leung said. At 30 percent, Groupon’s shares would have to decline by at least that much before the trader makes a profit." I must be missing something... When I buy shares, I don't get to inform the broker that the stock needs to go up by 30% before they can execute my trade at today's price. Betting on a stock to dip 5% seems like a big enough risk that I should be able to make money on it. 30% just sounds crazy.

deleted 15y ago
[deleted]
- lell 15y ago
  I really wanted to short this ticker during the IPO, but I was worried that I would have had to pay dividends that would go over my budget and I'd have to give up the positions before they were profitable, or that I'd accidently get futures instead of options (and potentially lose an arbitrary amount of money overnight). Does anyone know how one could have gone about shorting this in a way that made money with a budget of say $2500, (i.e., in a way that would have incurred a maximum loss of $2500) given what happened?
  - jmvoodoo 15y ago
    Buy put options.
  - dankohn1 15y ago
    Buy $2500 worth of puts. You would have large upside and could lose at most what you paid or the put. Of course, The time decay works against you, but that wouldn't matter given the swings you're expecting.
  - AndyIngram 15y ago
    It would be highly unlikely for Groupon to issue a dividend, but shorting does have risks you need to educate yourself on if you are going to attempt it. I have a feeling options particularly put options would be priced highly at this time so a better choice could be to do a bearish call spread. http://www.optionsxpress.com/free_education/strategies/bear_call_spread.aspx http://www.optionsxpress.com/free_education/strategies/bear_...

rokhayakebe 15y ago

Isn't it still up from where it started?

bryanh 15y ago
Yes, about 2-3% above $20, the stated IPO.
antr 15y ago
not really. it wen't public at 26+$/share. only if you had put an order (as an institutional investor, prior to going public i.e. traded) you would of been able to get in at $20/share.

tptacek 15y ago

Most 2011 tech IPOs are unhappy today. The market is volatile and bearish. In the absence of news, you can't interpret stuff like this --- especially given the fact that Groupon doesn't have a listed competitor --- without understanding where the whole market is at.

ila 15y ago
that is no explanation: - investors do not consider Groupon a tech company (it's all over the research reports) - Google, Intel are down marginally (non retail), Apple is up (tech retail). Nasdaq is ONLY 0.07% down. - Falling 14% is intrinsic to the stock, not the market.
- tptacek 15y ago
  Google, Intel, and Apple aren't unproven '11 IPOs. Look at Pandora, Zipcar, etc.
  - ila 15y ago
    I was making a point regarding tech. Groupon is not a technology stock, it didn't market itself as a tech company. I don't understand how on the one side you say "Groupon doesn't have a listed competitor" but you want to compare it to "unproven '11 IPOs. Look at Pandora, Zipcar, etc.". It all sounds to 1+1=5...

pathdependent 15y ago

As an indicator, my short position was closed out on Monday by my broker -- they couldn't find shares to borrow anymore.

radicaldreamer 15y ago
Might be time to go long then.
gujk 15y ago
How does that work? When you short, you immediately sell the shares you borrowed. Why aren't those shares available to be re-borrowed from the new owner? The only reason I can guess is that the new owner isn't connected to the liquidity system, which I would guess would have been a solved problem by now.
- pathdependent 15y ago
  http://www.sec.gov/rules/final/2009/34-60388.pdf http://www.sec.gov/rules/final/2009/34-60388.pdf

rythie 15y ago

If Groupon could cut costs by using a self-serve model (rather than 1000s of sales staff) it could drastically cut costs and potentially make a large profit. Surely at some point in the next few years they will be well known enough for businesses to go to them, instead of the other way around?

philwelch 15y ago
That assumes that Groupon is actually beneficial to the business that does one. They also need to manage the "coolness" and variety of offers and write snarky copy, so self-serve wouldn't necessarily bring it to break-even.
- rythie 15y ago
  In the long term they do need to be beneficial to the businesses that do it, otherwise they'll die in a few years from word of mouth. Who writes the copy is an issue, though just someone writing that would be cheap compared to chasing tons of businesses looking for work and talking to them all.
  - philwelch 15y ago
    The best bet is that they will die in a few years. The fundamental flaws with their business can't be solved with self-serve. It's not impossible to survive off the efforts of a predatory sales force without actually benefitting your customers, but small local businesses aren't the best prey and you have to actually be able to profit off it it. If you can spend that much money on salesmen, you're better off making enterprise software than social coupons.