Groupon Files IPO: Insiders Want to Unload Their Overpriced Shares to You

It is official: the NTY is reporting that the social networking powerhouse Groupon is looking to IPO. The company no doubt wants to replicate LinkedIn's ponzi-like valuation. Recent financings have suggested an implied value for Groupon of around $25 billion (according to the Idiot's Guide to Dot Com Bubble Valuation Handbook--where no profit is no problem). Here are a few highlights of Groupon's financial data:

  • Q1 Revenue of $644 million
  • Q1 Cash Flow of $7 million
  • $450 million loss for 2010
  • CEO statement regarding future profitability: 1) "We cannot be certain that we will be able to attain or increase profitability on a quarterly or annual basis.” 2) “In the past, we’ve made investments in growth that turned a healthy forecasted quarterly profit into a sizable loss.” 3)“When we see opportunities to invest in long-term growth, expect that we will pursue them regardless of certain short-term consequences.”-----Wall Street speak for we expect more losses.

The winners---CEO Andrew Mason, co-founder and board member Eric P. Lefkofsky, and venture capital firm Accel Partners.

The losers---Anyone who buys the stock on the first day of trading. You have to wonder how many fools are willing to stick their neck out and buy into the IPO after what happened to LinkedIn?

Black Swan Insights


1 comment:

  1. To many investors get sucked into IPO'S the main objective of a IPO is raising as much money for the company going public as possible and nothing else.