4 ms·

1.6B in revenue is pretty meaningless if you're not even making a profit. They are simply really good at losing a lot of money.

by ohashi 15y ago

zaidf 15y ago
It's "scary" and "even" dangerous one may say, but not meaningless.
- ohashi 15y ago
  You are correct, it's not meaningless, I should have said: Simply having revenue isn't a defense for a company if they are spending more money than they are bringing in.
pbreit 15y ago
Revenues are generally as important or more than profits for a company at Groupon's stage (ie, young, high growth). Since its primary expenses are sales and marketing, it's easy to envision how such a growth machine could become wildly profitable (hence the $9.4b market value).
- ohashi 15y ago
  It seems like imagination is about all they are running on. I would accept the idea that growth could be more important for some companies at an early stage. However, I don't think it's applicable to groupon's situation.
  - zaidf 15y ago
    However, I don't think it's applicable to groupon's situation That is debatable. Consider this: Amazon started off just selling books, today they are gunning for Walmart. At the time, people raised similar objections and Amazon took heat for years for remaining unprofitable. No one is complaining today. Similarly, I see Groupon's deals business as just one product. There are signs from their recent aquisitions that they might diversify with new products targeted at the same small businesses(such as credit card processing). Now, just because it all ended well for Amazon doesn't mean the same will happen for Groupon. I am just pointing out that it is not a foreign strategy to prefer growth over profitability for many years after the IPO.
    - ohashi 15y ago
      Was Amazon playing the same accounting tricks? Cashing out early investors/founders pre-ipo? I see a line between ponzi and strategy, Amazon is on one side and Groupon is on another in my mind.

1.6B in revenue is pretty meaningless if you're not even making a profit. They are simply really good at losing a lot of money.

by ohashi 15y ago

1.6B in revenue is pretty meaningless if you're not even making a profit. They are simply really good at losing a lot of money.

zaidf 15y ago

It's "scary" and "even" dangerous one may say, but not meaningless.

ohashi 15y ago
You are correct, it's not meaningless, I should have said: Simply having revenue isn't a defense for a company if they are spending more money than they are bringing in.

pbreit 15y ago

Revenues are generally as important or more than profits for a company at Groupon's stage (ie, young, high growth). Since its primary expenses are sales and marketing, it's easy to envision how such a growth machine could become wildly profitable (hence the $9.4b market value).

ohashi 15y ago
It seems like imagination is about all they are running on. I would accept the idea that growth could be more important for some companies at an early stage. However, I don't think it's applicable to groupon's situation.
- zaidf 15y ago
  However, I don't think it's applicable to groupon's situation That is debatable. Consider this: Amazon started off just selling books, today they are gunning for Walmart. At the time, people raised similar objections and Amazon took heat for years for remaining unprofitable. No one is complaining today. Similarly, I see Groupon's deals business as just one product. There are signs from their recent aquisitions that they might diversify with new products targeted at the same small businesses(such as credit card processing). Now, just because it all ended well for Amazon doesn't mean the same will happen for Groupon. I am just pointing out that it is not a foreign strategy to prefer growth over profitability for many years after the IPO.
  - ohashi 15y ago
    Was Amazon playing the same accounting tricks? Cashing out early investors/founders pre-ipo? I see a line between ponzi and strategy, Amazon is on one side and Groupon is on another in my mind.