Groupon Not Doing So Well On Wall Street 140
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Unknown Lamer
from the bad-business-idea-is-bad dept.
from the bad-business-idea-is-bad dept.
bdking writes "Shares of the daily-deals site were up Tuesday, but Groupon's ride on Wall Street since going public in early November has been almost all downhill. And there's no evident catalyst to reverse the slide."
From the looks of it, Groupon is blowing all of its money attempting to expand in the face of ever-growing competition in a market with trivial start-up costs.
The problem is greed (Score:5, Informative)
Groupon is dumping VC money directly to the founder's pockets [businessinsider.com] and screwing the businesses that participate [techcrunch.com]. That combination will result in failure.
Re:Show me the money (Score:5, Informative)
it's basically a ponzi scheme.
Nope, not even close.
The situation is analogous to "begs the question". "begs the question" has a technical very specific philosophical meaning but in modern prose it almost exclusively means "Insert wordy semi-scholastic filler phrase here". Also see "price point" instead of "price", etc etc. Hell, see "etc" too.
In modern American speech, "ponzi scheme" is a semi-scholastic phrase meaning "it sucks" or "I don't like it" or "they're crooks". It does have a real technical meaning and describes a criminal activity which has nothing at all to do with your explanation in any form. Ironically (irony is another often re-imagined word) their sales/finance strategy is vaguely ponzi like, in the sense that all corporate sales/finance strategies are when they reinvest any profits in the company, but not really, not in a criminal sense anyway, and certainly not in the market explanation you provided.
I can't think of a way to run a ponzi in/over/with a market like you describe... maybe a boiler room operation cooperating with false price quotes could pull it off?
Note that I'm not defending them; they appear based on lots of journalist stories to have published fraudulent financial data. That would make them frauds, not ponzi operators. I'm just saying it does no one on either side, any good, to describe a bank robber as a kidnapper, or describe a horse thief as a murderer.
Re:Show me the money (Score:5, Informative)
Re:Show me the money (Score:4, Informative)
Slashdot just uses whatever monospace font you have configured - it's not his fault you have Courier New.
In Firefox you can configure that in the Content tab in the preferences. I use Inconsolata and I find his post very readable.
Up next, Facebook (Score:4, Informative)
Facebook is the next company in trouble. Their Alexa reach peaked six months ago [alexa.com], before Google+ launched. That means Facebook is no longer a growth company, and they have to be valued strictly on profits, less their future potential for decline. They didn't IPO on the way up. Now it's too late for an inflated valuation.
Facebook's real financial figures aren't known. They haven't had to make the reports to the SEC that a public company has to make. Groupon (and AOL before them) inflated their profits by capitalizing and depreciating things they should have expensed. (AOL tried to account for those free AOL disks as capital expenses. That got them in trouble when it was noticed.)
On top of that, social networks have a limited life. AOL was once the leading social network. Remember Geocities? Orkut? Friendster? Yahoo 360? Myspace? Once the downward slide of a social network starts, it doesn't seem to stop.
Social networks also have a fundamental problem with advertising - it's an annoyance. Relevant ads that appear with search results are both useful for users and profitable for advertisers. Ads on social networks, where you go to connect with your friends, just get in the way. Social networks try to compensate for this by adding more and more ads. That killed Myspace, and Facebook seems to be on track to go the same way.
But Facebook has to IPO. They have to pay off the early-stage investors. This isn't going to be pretty.