Groupon Reports Q3 2012 Earnings Below Expectations

techcrunch.com

22 points·olivercameron··8 comments

Examples like this makes me scratch wonder about the sky-high valuations for Dropbox and Airbnb.

Kudos to Dropbox and Airbnb for executing on great ideas and building awesome companies.

Kudos to YC and other early investors for finding a diamond in the rough.

They'll all make tons of money :)

But those lofty valuations come with lofty expectations. Groupon has over $1B in revenue and a $2B marketcap but is perceived as a failure.

$1B in rev but $3 mm in losses without profitability in sight.

You can create a pretty "massive" company pretty quickly if you basically sell $10.00 for $9.97

Their size actually works against them. Lots of companies lose money in the early days, but are able to justify / demonstrate why and when they'll be profitable. If you already have $1 B in sales and are still operationally unprofitable ... how much more will it take?

Does this surprise anyone?

I am not surprised. They've had a rough time since going public. Their model does not seem quite sustainable and entities that partner with them in offering deals must be either desperate or extremely confident that they can generate enough buzz and retain customers to offset their losses.

Sounds like a losing strategy to me.

Is there any winning strategy that revolves around 'generating buzz'?

-14% after-hours. A close friend in a long-short fund I know will be celebrating this news all night. Value investors, I salute you.

You weren't kidding:

http://www.google.com/finance?q=NASDAQ%3AGRPN

Brutal.

This is what I said/discussed over 200 days ago:

http://news.ycombinator.com/item?id=3870044

It still has another billion to go (now at an equity value of $2.56bn), I guess that shorting now hasn't got the upside/return it had 200 days ago.

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