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This year's sales are on track to be even stronger: Groupon revealed in its filing to the SEC that it netted $645 million in sales in the first quarter of 2011 alone.
But Groupon is not yet profitable. It lost $413 million in 2010 and lost almost $114 million in the first quarter of 2011.
Doubtless Groupon will present its I.P.O. in sprightly Groupon style, probably something like this: “Sometimes it’s not enough simply to appreciate e-mails from clever people. Sometimes you want to own them too.” The offering could value the company at $25 billion, which would top Google’s 2004 debut as the richest ever for an Internet company.
Perhaps that sum will seem in hindsight to be a great deal, as was true with Google itself. Or maybe it will be Groupon’s best joke ever.
maybe this is why I'm not a billionaire yet but I just do not understand how a company that lost 413 million last year and is on track to lose more money this year can be valued at $25 billion.
decrease in losses
it seems like lunacy
it seems like lunacy
Presumably the reduced IPO price is because they are running coupons..
Yeah, all us fools trying to make money with our sites, turns out that in order to be truly worth anything you should be losing BIG.It's not as easy as it looks. I speak from a touch of experience.
The social buying site on Thursday filed to go public, a hotly anticipated debut that could raise $3 billion, according to two people close to the company who were not authorized to speak publicly. At that level, the company would be worth roughly $30 billion, surpassing the value of Google at its initial public offering.
[dealbook.nytimes.com...]
I have two retail clients who have tried Groupon and not been impressed with the results. And we have several local firms who are offering similar deals to retailers. Read the NYT feature in my first post on this thread and it's obvious (to me, at least) that that Groupon's idea is not scaleable.
I think Groupon has got a workable idea here. But, $30 billion? But, hey, they're not putting a gun to anyone's head.
I have a meeting next week with a regional direct mail service provider who wants to get into the Groupon biz and needs a website, FB, Twitter, email system, etc. They have a good relationship with about three dozen retailers in each of their five markets. I don't know why they shouldn't try it.
Today's Groupon Deal
$12.5 billion for $25 billion Worth of Groupon.
$12.5 billion {BUY!}
The deal is on! Only 1 deal left! (Limit 1 per person. Not valid on holidays or weekends.)
maybe this is why I'm not a billionaire yet but I just do not understand how a company that lost 413 million last year and is on track to lose more money this year can be valued at $25 billion.
[edited by: walkman at 7:14 pm (utc) on Jun 3, 2011]
[edited by: moTi at 11:49 pm (utc) on Jun 3, 2011]
If you can make money by giving a $100 service for $25 then something stinks with your pricing.Not really. The price on many products and services are determined by the value to the customer, not what the provider has put into it. Take books, for example. You print 10,000 books at at cost of $2 per. You sell 5,000 at $20. It's worth $20 to 5,000 people. You make $70,000 and you still have 5,000 books. What is the price you're willing to put on those books?
first of all, once again another "north america only" business. don't give me that "what comes from america rules the world sooner or later" thing. if you want to have global success, act globally. so far, there's no demand for the service outside their home country partly as a consequence of ridiculously bad business execution. groupon didn't get the foot in the door, despite buying up the local first movers. you only get one chance to make a first impression. probably it's already over and done in many foreign markets.
weeks,.. You picked an extreme. Software is another thing, Symantec for example can probably sell it's antivirus even for $3 if a billion people buy it but most of the Groupon deals are labor intensive. Someone has to be there and provide the service, massage, do nails, cook or whatever.
To underscore how service biz oriented the daily deal sector is, I looked at my morning deal selesction so far:
-airbrush tanning
-mani/pedi
-bootcamp workout
-golf lessons
-a $5 for $10 restaurant deal
Four of these are low variable cost services that, if excess capacity is available, can be offered cheaply. As long as the business operators don't schedule so many deals that they have to turn down full price business, they will boost profits and meet new prospects they can try to convert into long-term customers.
The $10 restaurant coupon is the exception, but the value is low enough to avoid major damage to the restaurant's bottom line and is probably a cheap way to acquire new customers.
There's likely a little benefit from the mailing, too. Each one is a potential branding impression, and the more appropriate the target the more likely they will study the offer and perhaps even click through to the website.
