9 ms·

Groupon down 27%, hits new low of $5.50

52 points by AlexMuir 14y ago

Gustomaximus 14y ago
I can't see this company being worth $1bn+ so IMO it has plenty more to go down. The only problem is when I shorted this stock a while back the cost was at such a premium the profit was negligible. Edit: added the bit about cost of shorting.
- dennisgorelik 14y ago
  Why haven't you sold call options then?
  - Gustomaximus 14y ago
    Options were on the to-do list that never got done. I've not traded options before so it would be a bit of a time commitment I didn't have to research first. Though I'm guessing the buyers of the options would want a hell of a premium also, so the benefit would be in the leveraging and not the margin.
    - orijing 14y ago
      The parent asked why you weren't /selling/ call options. So if the premiums were high, then you would be making a larger margin. Perhaps you confused it with buying puts?
      - michaelt 14y ago
        If he doesn't know the difference between buying and selling calls and puts, I'd say he's wise not to have invested.
    - modarts 14y ago
      You'd be on the upside of that margin though.
- deleted 14y ago
  [deleted]
- pbreit 14y ago
  With $570m in quarterly revenues, 40% y/y growth, $1.2b in cash and profitable, I'd like to hear your rationale on how it's not worth $1b.
  - Retric 14y ago
    revenues != profit. 50% of their revenue goes directly to the company's running the campaign. They then need to cover all business expenses ect with the other 50%. Assuming constant rather than declining sales and 5% of revenue being actual profit they would be worth ~300m + cash on hand or ~1.5 billion. Also, while they might be 'profitable' if there sales are declining without unsustainable advertising they may be worth little more than their cash on hand. PS: While they might seem like a tech company with high R&D costs that scales really well, they actually need a huge sales force to deal with local company's so they are stuck with crap profit margins relative to most tech stocks.
    - pbreit 14y ago
      > 50% of their revenue goes directly to the company's running the campaign False. > sales are declining False.
      - Retric 14y ago
        Groupon Loses Market Share as Online Daily Deals Decline(By Douglas MacMillan on August 15, 2012) At Groupon Inc. (GRPN), daily deals are fading. That’s the message the company sent many investors this week when it reported a decline in gross billings, or the total value of goods and services bought on its site, between the first and second quarters of this year. http://www.businessweek.com/news/2012-08-15/groupon-loses-market-share-as-online-daily-deals-decline http://www.businessweek.com/news/2012-08-15/groupon-loses-ma...
        pbreit 14y ago
        That's like pointing out that iPod sales are down. Groupon revenues were up in Q2. Period.
- meritt 14y ago
  Just for a bit of context, Facebook makes approximately 2x Groupon's revenue yet their market cap is 12x. Groupon made a net income of $32M in Q2 2012 while Facebook saw a net loss of ($157M). Might want to adjust your shorts. Groupon doesn't have much further to fall.
simonsarris 14y ago
It's worth noting that many new-ish companies can swing +/- 20% after quarterly earnings. Even bigger companies like Amazon and Google can swing up or down wildly. Sometimes they return to their original prices in a matter of days, sometimes not. Some recent examples, FIO: http://goo.gl/tcilJ http://goo.gl/tcilJ OCZ: http://goo.gl/Fac2O http://goo.gl/Fac2O (July 10 was the call) Zynga: http://goo.gl/GkIjU http://goo.gl/GkIjU (may not recover IMO) Anyway I don't want to make a judgement call on Groupon here, I just want to mention that this sort of thing is somewhat common and one earnings call (and stock price drop) alone doesn't spell death for the company. I'd be more worried if it was a gradual but consistent 27% decline than a day-after-earnings 27% decline.
- jerf 14y ago
  "I'd be more worried if it was a gradual but consistent 27% decline than a day-after-earnings 27% decline." Why not both? http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1344978862058&chddm=75854&chls=IntervalBasedLine&q=NASDAQ:GRPN&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...
- ceejayoz 14y ago
  > I'd be more worried if it was a gradual but consistent 27% decline than a day-after-earnings 27% decline. How about a gradual and consistent 80% decline? That's GRPN since IPO.
- michaelty 14y ago
  Don't catch a falling knife.
DividesByZero 14y ago
This is a good sign that we aren't in another tech bubble - the market is correctly pricing poor performers on their base metrics rather than speculation and hype.
- pyoung 14y ago
  Or that we were (note: past tense) in a bubble, but that bubble consisted of a handful of companies and only affected a small number of investors/VCs. This was a common theme in the HN threads on SV bubble speculation, and ultimately I think that's what turned out to be the case. I definitely agree that in the long run, this is a good thing. It sheds some of the hype and gets people focusing on the fundamentals.
  - wtvanhest 14y ago
    Calling that a bubble severely discounts past real bubbles.
  - samstave 14y ago
    Also, some of the companies that were holding that bubble inflated were pre-IPO, like Facebook... I think that FB is the real indicator of where we are with respect to market valuation/sanity.
- dredmorbius 14y ago
  The problem with bubbles is the expectations they lead to, and the broken expectations they leave behind. In this case, we may well have seen more of an expectations (and pre-IPO investment) bubble than an IPO/investment bubble. The angels, incubators, and VCs are burnt. But also founders and early hires latching onto social, advertising, gaming, and SEO start-ups who're finding that reality isn't matching the pitch. Even solid ideas are going to find capital harder to come by if a bigger chill hits. Of course, that's what everyone was saying in the fall of 2008 with "RIP Good Times". And while the recent boomlet hasn't been huge, it also wasn't quite the four horsemen of the apocalypse either. http://www.slideshare.net/eldon/sequoia-capital-on-startups-and-the-economic-downturn-presentation http://www.slideshare.net/eldon/sequoia-capital-on-startups-... I'm still rather dismayed that so many startups are so inconsequential, and are largely aimed at value extraction, capturing more wealth than they create, rather than value creation, creating a greater societal benefit and capturing a smaller (but sufficient) share of this. Tim O'Reilly's OSCON keynote hits a few of these notes beautifully: https://plus.google.com/107033731246200681024/posts/bhKxn9NbJz1 https://plus.google.com/107033731246200681024/posts/bhKxn9Nb... https://www.youtube.com/watch?v=Kbcgmf6eDKU&feature=player_embedded https://www.youtube.com/watch?v=Kbcgmf6eDKU&feature=play...
batgaijin 14y ago
Goldman Sachs was in charge of setting the IPO of Facebook and Groupon...
- hcarvalhoalves 14y ago
  That says something.
- dvdt 14y ago
  Wasn't Morgan Stanley the lead underwriter for Facebook's IPO?
- chollida1 14y ago
  No Goldman wasn't. http://www.reuters.com/article/2012/05/22/us-facebook-forecasts-idUSBRE84L06920120522 http://www.reuters.com/article/2012/05/22/us-facebook-foreca... > In the run-up to Facebook's $16 billion IPO, Morgan Stanley, the lead underwriter on the deal, ......
  - batgaijin 14y ago
    You are right, I stand corrected. I recently read this and just assumed: http://www.businessinsider.com/morgan-stanley-goldman-sachs-facebook-ipo-2012-5?op=1 http://www.businessinsider.com/morgan-stanley-goldman-sachs-...
    - chollida1 14y ago
      Just read the article, I can see why you'd make the conclusion you did:)
juddlyon 14y ago
If it seems to good to be true, it probably is.
tonetheman 14y ago
hahaha .... didn't google offer them a crap ton of money at some point. they need to fire the asses that did not take it.
- fosap 14y ago
  As a Google shareholder i was always strong against spending money on this uninteresting, uninovative and unsustainable shack. Well, nobody cared for my opinion, I want some sort of online and realtime voting system for shareholders. A bit like LQFB but with one vote per share.
bdz 14y ago
lesson learned from groupon and digg: take google's money
- ceejayoz 14y ago
  Speculation is "we turned down Google" was actually "Google got one look at our books and said 'fuck no'".
lowboy 14y ago
If anyone has a line to some execs at Groupon, I have an idea how they can turn things around: http://i.imgur.com/IgLqt.jpg http://i.imgur.com/IgLqt.jpg
- creativename 14y ago
  Wow, I enjoyed that way too much, lol
- lubos 14y ago
  "Buy it for an enemy!" brilliant :-)
- prawn 14y ago
  Expires on insolvency! Haha.

52 points by AlexMuir 14y ago

I can't see this company being worth $1bn+ so IMO it has plenty more to go down. The only problem is when I shorted this stock a while back the cost was at such a premium the profit was negligible. Edit: added the bit about cost of shorting.

dennisgorelik 14y ago
Why haven't you sold call options then?
- Gustomaximus 14y ago
  Options were on the to-do list that never got done. I've not traded options before so it would be a bit of a time commitment I didn't have to research first. Though I'm guessing the buyers of the options would want a hell of a premium also, so the benefit would be in the leveraging and not the margin.
  - orijing 14y ago
    The parent asked why you weren't /selling/ call options. So if the premiums were high, then you would be making a larger margin. Perhaps you confused it with buying puts?
    - michaelt 14y ago
      If he doesn't know the difference between buying and selling calls and puts, I'd say he's wise not to have invested.
  - modarts 14y ago
    You'd be on the upside of that margin though.
deleted 14y ago
[deleted]
pbreit 14y ago
With $570m in quarterly revenues, 40% y/y growth, $1.2b in cash and profitable, I'd like to hear your rationale on how it's not worth $1b.
- Retric 14y ago
  revenues != profit. 50% of their revenue goes directly to the company's running the campaign. They then need to cover all business expenses ect with the other 50%. Assuming constant rather than declining sales and 5% of revenue being actual profit they would be worth ~300m + cash on hand or ~1.5 billion. Also, while they might be 'profitable' if there sales are declining without unsustainable advertising they may be worth little more than their cash on hand. PS: While they might seem like a tech company with high R&D costs that scales really well, they actually need a huge sales force to deal with local company's so they are stuck with crap profit margins relative to most tech stocks.
  - pbreit 14y ago
    > 50% of their revenue goes directly to the company's running the campaign False. > sales are declining False.
    - Retric 14y ago
      Groupon Loses Market Share as Online Daily Deals Decline(By Douglas MacMillan on August 15, 2012) At Groupon Inc. (GRPN), daily deals are fading. That’s the message the company sent many investors this week when it reported a decline in gross billings, or the total value of goods and services bought on its site, between the first and second quarters of this year. http://www.businessweek.com/news/2012-08-15/groupon-loses-market-share-as-online-daily-deals-decline http://www.businessweek.com/news/2012-08-15/groupon-loses-ma...
      - pbreit 14y ago
        That's like pointing out that iPod sales are down. Groupon revenues were up in Q2. Period.
meritt 14y ago
Just for a bit of context, Facebook makes approximately 2x Groupon's revenue yet their market cap is 12x. Groupon made a net income of $32M in Q2 2012 while Facebook saw a net loss of ($157M). Might want to adjust your shorts. Groupon doesn't have much further to fall.

simonsarris 14y ago

It's worth noting that many new-ish companies can swing +/- 20% after quarterly earnings. Even bigger companies like Amazon and Google can swing up or down wildly. Sometimes they return to their original prices in a matter of days, sometimes not. Some recent examples, FIO: http://goo.gl/tcilJ http://goo.gl/tcilJ OCZ: http://goo.gl/Fac2O http://goo.gl/Fac2O (July 10 was the call) Zynga: http://goo.gl/GkIjU http://goo.gl/GkIjU (may not recover IMO) Anyway I don't want to make a judgement call on Groupon here, I just want to mention that this sort of thing is somewhat common and one earnings call (and stock price drop) alone doesn't spell death for the company. I'd be more worried if it was a gradual but consistent 27% decline than a day-after-earnings 27% decline.

jerf 14y ago
"I'd be more worried if it was a gradual but consistent 27% decline than a day-after-earnings 27% decline." Why not both? http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1344978862058&chddm=75854&chls=IntervalBasedLine&q=NASDAQ:GRPN&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...
ceejayoz 14y ago
> I'd be more worried if it was a gradual but consistent 27% decline than a day-after-earnings 27% decline. How about a gradual and consistent 80% decline? That's GRPN since IPO.
michaelty 14y ago
Don't catch a falling knife.

DividesByZero 14y ago

This is a good sign that we aren't in another tech bubble - the market is correctly pricing poor performers on their base metrics rather than speculation and hype.

pyoung 14y ago
Or that we were (note: past tense) in a bubble, but that bubble consisted of a handful of companies and only affected a small number of investors/VCs. This was a common theme in the HN threads on SV bubble speculation, and ultimately I think that's what turned out to be the case. I definitely agree that in the long run, this is a good thing. It sheds some of the hype and gets people focusing on the fundamentals.
- wtvanhest 14y ago
  Calling that a bubble severely discounts past real bubbles.
- samstave 14y ago
  Also, some of the companies that were holding that bubble inflated were pre-IPO, like Facebook... I think that FB is the real indicator of where we are with respect to market valuation/sanity.
dredmorbius 14y ago
The problem with bubbles is the expectations they lead to, and the broken expectations they leave behind. In this case, we may well have seen more of an expectations (and pre-IPO investment) bubble than an IPO/investment bubble. The angels, incubators, and VCs are burnt. But also founders and early hires latching onto social, advertising, gaming, and SEO start-ups who're finding that reality isn't matching the pitch. Even solid ideas are going to find capital harder to come by if a bigger chill hits. Of course, that's what everyone was saying in the fall of 2008 with "RIP Good Times". And while the recent boomlet hasn't been huge, it also wasn't quite the four horsemen of the apocalypse either. http://www.slideshare.net/eldon/sequoia-capital-on-startups-and-the-economic-downturn-presentation http://www.slideshare.net/eldon/sequoia-capital-on-startups-... I'm still rather dismayed that so many startups are so inconsequential, and are largely aimed at value extraction, capturing more wealth than they create, rather than value creation, creating a greater societal benefit and capturing a smaller (but sufficient) share of this. Tim O'Reilly's OSCON keynote hits a few of these notes beautifully: https://plus.google.com/107033731246200681024/posts/bhKxn9NbJz1 https://plus.google.com/107033731246200681024/posts/bhKxn9Nb... https://www.youtube.com/watch?v=Kbcgmf6eDKU&feature=player_embedded https://www.youtube.com/watch?v=Kbcgmf6eDKU&feature=play...

batgaijin 14y ago

Goldman Sachs was in charge of setting the IPO of Facebook and Groupon...

hcarvalhoalves 14y ago
That says something.
dvdt 14y ago
Wasn't Morgan Stanley the lead underwriter for Facebook's IPO?
chollida1 14y ago
No Goldman wasn't. http://www.reuters.com/article/2012/05/22/us-facebook-forecasts-idUSBRE84L06920120522 http://www.reuters.com/article/2012/05/22/us-facebook-foreca... > In the run-up to Facebook's $16 billion IPO, Morgan Stanley, the lead underwriter on the deal, ......
- batgaijin 14y ago
  You are right, I stand corrected. I recently read this and just assumed: http://www.businessinsider.com/morgan-stanley-goldman-sachs-facebook-ipo-2012-5?op=1 http://www.businessinsider.com/morgan-stanley-goldman-sachs-...
  - chollida1 14y ago
    Just read the article, I can see why you'd make the conclusion you did:)

juddlyon 14y ago

If it seems to good to be true, it probably is.

tonetheman 14y ago

hahaha .... didn't google offer them a crap ton of money at some point. they need to fire the asses that did not take it.

fosap 14y ago
As a Google shareholder i was always strong against spending money on this uninteresting, uninovative and unsustainable shack. Well, nobody cared for my opinion, I want some sort of online and realtime voting system for shareholders. A bit like LQFB but with one vote per share.

bdz 14y ago

lesson learned from groupon and digg: take google's money

ceejayoz 14y ago
Speculation is "we turned down Google" was actually "Google got one look at our books and said 'fuck no'".

lowboy 14y ago

If anyone has a line to some execs at Groupon, I have an idea how they can turn things around: http://i.imgur.com/IgLqt.jpg http://i.imgur.com/IgLqt.jpg

creativename 14y ago
Wow, I enjoyed that way too much, lol
lubos 14y ago
"Buy it for an enemy!" brilliant :-)
prawn 14y ago
Expires on insolvency! Haha.