4 ms·

Maybe it's my limited understanding of finance, but I have trouble understanding why people thought it was a good idea to invest in a coupon company in the firs

by pwny 14y ago

Maybe it's my limited understanding of finance, but I have trouble understanding why people thought it was a good idea to invest in a coupon company in the first place.

smackfu 14y ago
Mainly because you aren't appreciating how tech-savvy you are.
dkokelley 14y ago
Honestly, it has little to do with finance, and much to do with hype. It's not about fundamentals. It's about what the stock will be trading at in a month. If there was a track record of dog crap selling for twice its value every week, you would be stupid not to buy, right?! Sometimes there's just a bubble of one.
- aqme28 14y ago
  This kind of trading is called growth investing[1] and is very common and is still popular within the financial world, despite the occasional setback. [1]: http://en.wikipedia.org/wiki/Growth_investing http://en.wikipedia.org/wiki/Growth_investing
  - tomkarlo 14y ago
    There's growth investing, and there's pure speculation (which may or may not involve growth companies.) He seems to be talking about the latter - buying in the hope of a "greater fool". Growth investing is based upon the idea that the purchased business will grow and the stock price will rise over time as a result.
nirvana 14y ago
An IPO is a sale of stock. When selling any product there may be a guaranteed audience (e.g.: institutional investors) but groupon (and Facebook) both have the advantage that millions of regular consumers are aware of them. Thus, the average mom in illinois is far more likely to buy Groupon or FB than JDS-Uniphase or Applied Materials.
- koeselitz 14y ago
  I am by no means an expert on financial markets, but my layman's observation is that the internet seems to have changed the whole equation dramatically. In 1980, it would have been almost completely impossible for a new-ish company a few years old to have almost a billion customers. But now it's possible, and moreover it's possible to do that without any of those 'customers' having bought anything at all. I imagine that makes the whole game much more volatile.
bradleyland 14y ago
"Get off my lawn" comment incoming :) Once upon a time, there were some very large and very profitable companies whose business centered around "coupons". The difference is that they used to come in your mailbox, and companies paid for inclusion as a means of advertising. This was a very popular business model in the direct mail industry, which could be viewed as a precursor to many of today's internet business models. So, there are plenty of institutional investors over the age of 40 who saw the Groupon business as something recognizable, and decided to invest, because we like to invest in what we know. I can't believe I thought history was a boring subject in school. These days, the empowerment of just a little history goes a long way.
pbreit 14y ago
Coupons (and loyalty, promotions, advertising, marketing, etc) is a _very_ large business. Groupon is the first company to crack local advertising in a really big new way and had been rewarded handsomely (even if it's current stock price is well off its high). Now that Groupon is getting its business in order and expanding into several other very large adjacent markets, it should remain a compelling business. Not only does your comment reveal a lack of understanding of finance but business, in general.
astrodust 14y ago
Why do people play slot machines or buy lottery tickets? There you will find your answer.

by pwny 14y ago

Maybe it's my limited understanding of finance, but I have trouble understanding why people thought it was a good idea to invest in a coupon company in the first place.

smackfu 14y ago

Mainly because you aren't appreciating how tech-savvy you are.

dkokelley 14y ago

Honestly, it has little to do with finance, and much to do with hype. It's not about fundamentals. It's about what the stock will be trading at in a month. If there was a track record of dog crap selling for twice its value every week, you would be stupid not to buy, right?! Sometimes there's just a bubble of one.

aqme28 14y ago
This kind of trading is called growth investing[1] and is very common and is still popular within the financial world, despite the occasional setback. [1]: http://en.wikipedia.org/wiki/Growth_investing http://en.wikipedia.org/wiki/Growth_investing
- tomkarlo 14y ago
  There's growth investing, and there's pure speculation (which may or may not involve growth companies.) He seems to be talking about the latter - buying in the hope of a "greater fool". Growth investing is based upon the idea that the purchased business will grow and the stock price will rise over time as a result.

nirvana 14y ago

An IPO is a sale of stock. When selling any product there may be a guaranteed audience (e.g.: institutional investors) but groupon (and Facebook) both have the advantage that millions of regular consumers are aware of them. Thus, the average mom in illinois is far more likely to buy Groupon or FB than JDS-Uniphase or Applied Materials.

koeselitz 14y ago
I am by no means an expert on financial markets, but my layman's observation is that the internet seems to have changed the whole equation dramatically. In 1980, it would have been almost completely impossible for a new-ish company a few years old to have almost a billion customers. But now it's possible, and moreover it's possible to do that without any of those 'customers' having bought anything at all. I imagine that makes the whole game much more volatile.

bradleyland 14y ago

"Get off my lawn" comment incoming :) Once upon a time, there were some very large and very profitable companies whose business centered around "coupons". The difference is that they used to come in your mailbox, and companies paid for inclusion as a means of advertising. This was a very popular business model in the direct mail industry, which could be viewed as a precursor to many of today's internet business models. So, there are plenty of institutional investors over the age of 40 who saw the Groupon business as something recognizable, and decided to invest, because we like to invest in what we know. I can't believe I thought history was a boring subject in school. These days, the empowerment of just a little history goes a long way.

pbreit 14y ago

Coupons (and loyalty, promotions, advertising, marketing, etc) is a _very_ large business. Groupon is the first company to crack local advertising in a really big new way and had been rewarded handsomely (even if it's current stock price is well off its high). Now that Groupon is getting its business in order and expanding into several other very large adjacent markets, it should remain a compelling business. Not only does your comment reveal a lack of understanding of finance but business, in general.

astrodust 14y ago

Why do people play slot machines or buy lottery tickets? There you will find your answer.