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Comment by Gustomaximus | Hacker News Reader

I can't see this company being worth $1bn+ so IMO it has plenty more to go down.

The only problem is when I shorted this stock a while back the cost was at such a premium the profit was negligible.

Edit: added the bit about cost of shorting.

With $570m in quarterly revenues, 40% y/y growth, $1.2b in cash and profitable, I'd like to hear your rationale on how it's not worth $1b.

revenues != profit. 50% of their revenue goes directly to the company's running the campaign. They then need to cover all business expenses ect with the other 50%. Assuming constant rather than declining sales and 5% of revenue being actual profit they would be worth ~300m + cash on hand or ~1.5 billion. Also, while they might be 'profitable' if there sales are declining without unsustainable advertising they may be worth little more than their cash on hand.

PS: While they might seem like a tech company with high R&D costs that scales really well, they actually need a huge sales force to deal with local company's so they are stuck with crap profit margins relative to most tech stocks.

> 50% of their revenue goes directly to the company's running the campaign

False.

> sales are declining

False.

Groupon Loses Market Share as Online Daily Deals Decline(By Douglas MacMillan on August 15, 2012)

At Groupon Inc. (GRPN), daily deals are fading. That’s the message the company sent many investors this week when it reported a decline in gross billings, or the total value of goods and services bought on its site, between the first and second quarters of this year.

http://www.businessweek.com/news/2012-08-15/groupon-loses-ma...

That's like pointing out that iPod sales are down. Groupon revenues were up in Q2. Period.

Why haven't you sold call options then?

Options were on the to-do list that never got done. I've not traded options before so it would be a bit of a time commitment I didn't have to research first. Though I'm guessing the buyers of the options would want a hell of a premium also, so the benefit would be in the leveraging and not the margin.

The parent asked why you weren't /selling/ call options. So if the premiums were high, then you would be making a larger margin. Perhaps you confused it with buying puts?

If he doesn't know the difference between buying and selling calls and puts, I'd say he's wise not to have invested.

You'd be on the upside of that margin though.

Just for a bit of context, Facebook makes approximately 2x Groupon's revenue yet their market cap is 12x. Groupon made a net income of $32M in Q2 2012 while Facebook saw a net loss of ($157M).

Might want to adjust your shorts. Groupon doesn't have much further to fall.

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