3 ms·

The insiders lock in period ends May 2nd, that's 30 days to keep it together before they can start cashing out. If they last that long they have 12 days before

by dia80 15y ago

The insiders lock in period ends May 2nd, that's 30 days to keep it together before they can start cashing out. If they last that long they have 12 days before Q1 results. It's going to be tricky to unload meaningful quantities of stock before the earnings since daily volume averages 0.4% of market cap and 95% of the stock is held by pre IPO investors. The pressure to manipulate earnings and create more time for the insiders to salvage value must be unbearable. GroupOn may be remembered as the first big fraud of "Bubble 2.0" Pets.com lasted 268 days from IPO to liquidation, it could be close.

deleted 15y ago
[deleted]
antr 15y ago
How different is dumping Groupon stock by pre-IPO investors (who really know what's going on inside the company) and large investment banks selling over-valued MBS? None. Large cap VCs are no different to Wall Street, and they want to make us believe otherwise.
- wpietri 15y ago
  I think the important difference between VCs and Wall Street is that the MBS stuff was obvious chicanery with a terrible societal cost. They might as well have been stuffing horse manure into sausage casings and selling it as all-beef hot dogs. I grant that Groupon is pretty dubious, but the other upcoming tech IPO candidates I know about have actual solid businesses. I think VCs don't generally play the "greater fool" game, if only because it doesn't work well at their timescales. MBSes were very liquid, and the organizations making them had ways of selling them off quickly. For VCs, on the other hand, the median time from initial investment to exit is something like 7 years; that's a long time to wait hoping that nobody sees through the bullshit.
  - antr 15y ago
    I partly agree with your argument, specially on the liquidity side. Having said that, Venture Capital is one of the riskiest investments, and they wan't to make outside investors feel as if these companies are Treasury Bonds. VCs should be less selfish and admit that raising Series A, B or C does not validate a business and it's ability to become a great company. An it specially does not validate ridiculous valuations in the Stock Market. Just watch Jeff Clavier's interview in Blooomberg, it's simply embarrassing: http://www.bloomberg.com/video/74892006/ http://www.bloomberg.com/video/74892006/ IPO investors should sue any pre-IPO investor going on national TV arguing how great their investment is, and later dumping the stock. Just listen Jeff's argument and count the number of "if". He is just making a bunch of excuses of why Groupon is great, all conditional to god know what kind of number of hypothetical events. This is acts are dangerous, selfish and immature, as they damage the Startups' image to society.
knowsnothing613 15y ago
Groupon is a ponzi. They need money from new groupons to pay out past groupons. This is why they are constantly buying out smaller companies for new markets, and getting into higher end groupons. If the new money coming in is less than the money payed out to previous groupon, the companies collapses, just like a ponzi. As long as they can make the company look healthy in the near term (accounting tricks), they hope investors won't notice the medium-long term liabilities, or the flow of funds necessary to keep the company afloat, but by then insiders would have sold out the bulk of their positions, and someone else is holding the bag. Groupon will signal the bursting of web bubble 2.0, and will drag down the Facebook IPO. And if the Facebook IPO falters, silicon valley hits the skids, because everyone in Silicon Valley is in that play. Everyone.
- wpietri 15y ago
  I think that a) Groupon will take longer to blow up than that, and b) people will be happy to write off the daily deals sector as something pretty much unrelated to Silicon Valley. Groupon is in Chicago, Living Social is in DC. They are marketing companies, not technology companies. Now if something else fails big, I'm sure people will see a trend. But I don't think Groupon will be enough.
  - antr 15y ago
    Groupon is VERY Silicon Valley, investors include NEA, Andreessen Horowitz and Kleiner Perkins.
- matwood 15y ago
  As long as they can make the company look healthy in the near term They are not doing a very good job given the lead articles in the WSJ talking about Groupons financial issues.
- pbreit 15y ago
  Mostly tripe in this post. You do realize that Groupon only pays out 40% or so what it brings in making ponzi activity unnecessary.
- 15y ago
rdl 15y ago
Didn't most of the insiders already cash out before the IPO?
- pbreit 15y ago
  No. Just a handful of executives and investors.
RichardKim 15y ago
Please keep in mind, most secondaries are done like a IPO except its secondary shares not primary. Bankers line up a set of buyers to sell in blocks (usually at a discount but not as much as IPO discount) in order to help with the massive liquidity inflow. Also, they can't dump their entire stake. Usually IPOs of tech companies get to dump around 25% max of top mgmt stake in its first secondary offering and bankers will advise companies to usually wait 3-6 months to dump another stake and so forth especially for companies with low barriers to entry. So the entire process takes a decently long time not one month or quarter. Management dumping so much ahead of IPO is very suspicious and /or at the very least it may imply they have no conviction in their core business model. I mean companies go public to raise money to propel growth. It should help pump up the share price. On top of that, original IPO budgets given to banks are usually conservative so that MGMT doesn't miss guidance for the first 4-6 quarters until they can dump all of their shares. The fact that in their first quarter they missed their own guidance suggests the business is in a whole lot worse shape than even what the company expected. That's bad news.

by dia80 15y ago

deleted 15y ago

[deleted]

antr 15y ago

How different is dumping Groupon stock by pre-IPO investors (who really know what's going on inside the company) and large investment banks selling over-valued MBS? None. Large cap VCs are no different to Wall Street, and they want to make us believe otherwise.

wpietri 15y ago
I think the important difference between VCs and Wall Street is that the MBS stuff was obvious chicanery with a terrible societal cost. They might as well have been stuffing horse manure into sausage casings and selling it as all-beef hot dogs. I grant that Groupon is pretty dubious, but the other upcoming tech IPO candidates I know about have actual solid businesses. I think VCs don't generally play the "greater fool" game, if only because it doesn't work well at their timescales. MBSes were very liquid, and the organizations making them had ways of selling them off quickly. For VCs, on the other hand, the median time from initial investment to exit is something like 7 years; that's a long time to wait hoping that nobody sees through the bullshit.
- antr 15y ago
  I partly agree with your argument, specially on the liquidity side. Having said that, Venture Capital is one of the riskiest investments, and they wan't to make outside investors feel as if these companies are Treasury Bonds. VCs should be less selfish and admit that raising Series A, B or C does not validate a business and it's ability to become a great company. An it specially does not validate ridiculous valuations in the Stock Market. Just watch Jeff Clavier's interview in Blooomberg, it's simply embarrassing: http://www.bloomberg.com/video/74892006/ http://www.bloomberg.com/video/74892006/ IPO investors should sue any pre-IPO investor going on national TV arguing how great their investment is, and later dumping the stock. Just listen Jeff's argument and count the number of "if". He is just making a bunch of excuses of why Groupon is great, all conditional to god know what kind of number of hypothetical events. This is acts are dangerous, selfish and immature, as they damage the Startups' image to society.

knowsnothing613 15y ago

Groupon is a ponzi. They need money from new groupons to pay out past groupons. This is why they are constantly buying out smaller companies for new markets, and getting into higher end groupons. If the new money coming in is less than the money payed out to previous groupon, the companies collapses, just like a ponzi. As long as they can make the company look healthy in the near term (accounting tricks), they hope investors won't notice the medium-long term liabilities, or the flow of funds necessary to keep the company afloat, but by then insiders would have sold out the bulk of their positions, and someone else is holding the bag. Groupon will signal the bursting of web bubble 2.0, and will drag down the Facebook IPO. And if the Facebook IPO falters, silicon valley hits the skids, because everyone in Silicon Valley is in that play. Everyone.

wpietri 15y ago
I think that a) Groupon will take longer to blow up than that, and b) people will be happy to write off the daily deals sector as something pretty much unrelated to Silicon Valley. Groupon is in Chicago, Living Social is in DC. They are marketing companies, not technology companies. Now if something else fails big, I'm sure people will see a trend. But I don't think Groupon will be enough.
- antr 15y ago
  Groupon is VERY Silicon Valley, investors include NEA, Andreessen Horowitz and Kleiner Perkins.
matwood 15y ago
As long as they can make the company look healthy in the near term They are not doing a very good job given the lead articles in the WSJ talking about Groupons financial issues.
pbreit 15y ago
Mostly tripe in this post. You do realize that Groupon only pays out 40% or so what it brings in making ponzi activity unnecessary.
15y ago

rdl 15y ago

Didn't most of the insiders already cash out before the IPO?

pbreit 15y ago
No. Just a handful of executives and investors.

RichardKim 15y ago

Please keep in mind, most secondaries are done like a IPO except its secondary shares not primary. Bankers line up a set of buyers to sell in blocks (usually at a discount but not as much as IPO discount) in order to help with the massive liquidity inflow. Also, they can't dump their entire stake. Usually IPOs of tech companies get to dump around 25% max of top mgmt stake in its first secondary offering and bankers will advise companies to usually wait 3-6 months to dump another stake and so forth especially for companies with low barriers to entry. So the entire process takes a decently long time not one month or quarter. Management dumping so much ahead of IPO is very suspicious and /or at the very least it may imply they have no conviction in their core business model. I mean companies go public to raise money to propel growth. It should help pump up the share price. On top of that, original IPO budgets given to banks are usually conservative so that MGMT doesn't miss guidance for the first 4-6 quarters until they can dump all of their shares. The fact that in their first quarter they missed their own guidance suggests the business is in a whole lot worse shape than even what the company expected. That's bad news.