# Groupon IPO Cancelled



## sags (May 15, 2010)

News reports are that Groupon is cancelling their IPO, due to volatile markets.

It is also reported they are burning through a lot of cash and are either going to have to issue an IPO or raise capital to pay businesses for old deals. 

Their business practice of accepting customer cash immediately and paying business owners 180 days later, has a lot of businesses opting out of further participation. 

The FCC also raised questions on some accounting in their IPO prospectus.

I doubt if Google would offer them 6 Billion _pennies_ now.

http://video.cnbc.com/gallery/?video=3000044111

http://video.cnbc.com/gallery/?vide...iZ1BhZ2UiOiIxIiwic3ltIjoiIiwic2VhcmNoIjoiIn0=


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## Dmoney (Apr 28, 2011)

I really hope they go bust after turning down Google's offer. That's just greed beyond belief. Now their business model has been replicated a thousand times over and they really don't have anything to differentiate themselves other than scope.


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## lewin (Jan 10, 2011)

Maybe it's because I'm from a mid-sized city, but 90% of what I get from groupon is photo sessions, spa services, and car/house cleaning. No thanks! What I liked about groupon were the restaurant deals; I guess that era has passed.


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## andrewf (Mar 1, 2010)

Agreed. They should have taken the Google offer and run. They are still hemorrhaging cash, so they will have to either IPO or find another private placement. 

Same goes for Facebook, I think they made a mistake not coming to market yet.


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## Ethan (Aug 8, 2010)

I wouldn't have invested in GroupOn at any price. Great product, but there are no barriers to entry and already several companies offering identical services. I just don't see a competitive advantage they could have exploited in the long run.


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## HaroldCrump (Jun 10, 2009)

Google just bought Zagat...not quite Groupon but along the same lines.

These spoilt tech brat CEOs have no idea about their own valuations.
Look at how Yahoo turned down the Microsoft bid.
That was the best thing that ever happened to Yahoo in the last 11 years, and they ruined it.


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## Abha (Jun 26, 2011)

Ethan said:


> I wouldn't have invested in GroupOn at any price. Great product, but there are no barriers to entry and already several companies offering identical services. I just don't see a competitive advantage they could have exploited in the long run.


They don't have a competitive advantage above the other players but there certainly are barriers to entry.

I think the winner in this will be whoever ends up partnering...much like Living Social and Amazon.


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## Argonaut (Dec 7, 2010)

Yet another failure because they didn't follow the Steve Miller rule of investing. Take the Money and Run.


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## Abha (Jun 26, 2011)

Argonaut said:


> Yet another failure because they didn't follow the Steve Miller rule of investing. Take the Money and Run.


I get burned a lot by not following this rule many times (especially with triple leveraged ETFs). I should tattoo this on my forehead.


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## sags (May 15, 2010)

With the Google acquisition........goodbye Groupon. 

Google will put the big hurt on them bidding for advertising space, and drive their cost basis over the edge. Groupon already paid a stiff price for all that advertising ......something like 170 million in 2010.

Google can pay any price for top billing...........they are paying themselves......

It's nice to be the top dog.


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## Abha (Jun 26, 2011)

I am a shareholder in Google and sometimes I worry that they are spreading themselves so thin.

It's getting to be that "jack of all trades, master of none" mentality.

Only time will tell, but it is worrying seeing their hands in every pot.


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## HaroldCrump (Jun 10, 2009)

Google is already the master of search engines, almost to an unhealthy degree.
It is amazing how competitors have been dropping like flies.
Even giant Microsoft can't compete with that Bing s*th even after pouring millions into research.

The problem Google faces is typical of large scale monopolies...what to do after a certain point.
How to deploy capital at ever increasing rates of return.
What do to with the huge amounts of cash pouring in.

Not quite the same level, but witness Rogers' entry into the financial services market.
Bell has been dabbling with a whole bunch of different things including business consulting services.

In all cases, it's the problem of economic surplus and law of diminishing returns.


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## Abha (Jun 26, 2011)

I agree wholeheartedly about their dominance in Search but at some point that dominance will begin to wane much like Microsoft's control over browsers. 

Also Bing (which consists of MSN - YAHOO and BING) has been taking market share from Google as of late.

I remember reading not too long ago that Google is in the low 60's and Microsoft has taken about 30 - 35%. 

In any event, I'm rooting for Google (as a shareholder) but I don't like a lot of their recent decisions. For instance, they should have just bought or licensed the Motorola patents. They didn't need to overpay for the whole company. The purchase of Zagat today makes no sense. Yelp is a significantly better acquisition.


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## KaeJS (Sep 28, 2010)

Groupon is just a dumb idea from the start, if you ask me.


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## sags (May 15, 2010)

Regardless of the search engine a person uses, they will probably end up on a website that contains Google Adsense ads.

If Google replaces Groupon ads with Zagat ads on tens of millions of websites using Google Adsense for revenue..........what does Groupon do?

These guys peed on Google, and now Google is going to crush them like a bug.

The Groupon owners could quite possibly become a cliche term in the future.

"Better be careful........don't want to do a Groupon".


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## Abha (Jun 26, 2011)

sags said:


> Regardless of the search engine a person uses, they will probably end up on a website that contains Google Adsense ads.
> 
> If Google replaces Groupon ads with Zagat ads on tens of millions of websites using Google Adsense for revenue..........what does Groupon do?


I'm pretty sure if they "replaced" ad's they would gather the attention of the anti-trust committee pretty quickly.


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## Lephturn (Aug 31, 2009)

Agreed that turning down 6 Billion was the most colossally stupid thing I've seen anyone do in a long long time.

I guess their egos got too big - that offer was insane in terms of valuation, and to turn down that kind of cash you'd have to have lost your mind.

Think of the impact on the families of these people? Just imagine that your spouse was CEO of Groupon and made this decision? 

"Doing a Groupon" indeed.


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## Dmoney (Apr 28, 2011)

Lephturn said:


> Agreed that turning down 6 Billion was the most colossally stupid thing I've seen anyone do in a long long time.
> 
> I guess their egos got too big - that offer was insane in terms of valuation, and to turn down that kind of cash you'd have to have lost your mind.
> 
> ...


And it's not even like it's a business that is generating strong cash flows. You can't live off negative earnings and cash outflows. I'd be curious to see if the CEO and staff are pulling in big salaries to make up for some of the loss. Unbelievable greed and ego in play.


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## sags (May 15, 2010)

I read the CEO receives 180,000 a year.

The investors put 1.2 Billion into the Groupon startup and took out 950 million already. They might break even if Groupon goes down.......but Groupon does owe a ton of cash to merchants for past deals.

The were really counting on an IPO to pay off their debts and move ahead, because it isn't likely a lot of private money is interested in paying off their old debts.

Delaying the IPO until now was mistake number 2?


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## HaroldCrump (Jun 10, 2009)

sags said:


> The were really counting on an IPO to pay off their debts and move ahead


So it's really a bailout, not an IPO.
I guess I'm not lining up to subscribe to the IPO


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## sags (May 15, 2010)

If they don't issue an IPO in the future......we will see what appetite private investors have.

If they jump in.........maybe it is worth a look.

If Groupon returns to the IPO market with a greatly watered down offering, I would have to suspect the private money told them to get lost.

Patience is key here, I think.


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