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Sunday, June 5, 2011

Groupon: perhaps the worst overheated bubble IPO EVER? Here's WHY!

Groupon: perhaps the worst overheated bubble IPO EVER? Here's WHY!

"While preferred stockholders are among the first individuals rewarded when companies do well, Groupon’s performance thus far has hardly warranted the significant dividends these individuals have received. In total, Groupon has paid out $930 million to employees and investors. Equally alarming, in spite of losing $390 million from operations in 2010, Groupon spent $52.9 million buying preferred shares. The obvious question raised by all this is why preferred shareholders seem to be squeezing as much out of the company during these preliminary stages.

Unfortunately, the once blue ocean has quickly filled with red as countless competitors enter the space on a daily basis. A savvy investor asks, “What’s the barrier to entry?” NONE. The only competitive advantage large daily deal sites have is the size of the email lists they promote to businesses. However, in the case of local proprietors such as restaurants and spas, local newspapers and other businesses will likely have a MUCH LARGER email list of prospective local customers."

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