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More


Groupon and LivingSocial – Get Caught Red Handed
 10/17/2011 edit
By PJLouis
Tags: Groupon, LivingSocial, discount coupons, vouchers

http://www.pcworld.com/article/241928/groupon_livingsocial_caught_inflating_deal_values.html

 

I guessed Groupon and LivingSocial had been forcing vendors to give up far too much of the vouchers’ value.  However, I did not think Groupon (and now LivingSocial) were stupid enough to actually jack up the prices of the retailers first and then discount their own customers’ products and services.

Groupon and even LivingSocial really must think consumers are stupid.

If Groupon and LivingSocial are pulling stupid tricks like this to overvalue their financials then neither of them should be filing for an IPO.

A former Groupon spokesperson stated that some of their customers inflate their prices when they deal with Groupon.  Let us say that is true.  I can only guess why Groupon retail business customers inflate their prices; because Groupon is taking such a large cut of the coupon value the retail business is actually losing money.  Read my past postings on this point.

Groupon and now even LivingSocial are behaving badly.  Who in the world are the financial advisors for these companies?  They ought to be FIRED!!!  Oh, wait a minute;  Goldman Sachs is handling one of the companies. Now that people are figuring out how Groupon and LivignSocial are ripping consumers off, only an idiot would purchase their stock (if they ever file for IPOs).

By the way, LivingSocial’s comment about their company possibly inflating prices is nonsense.  What did the LivignSocial spokesman say:  “If it happens, it happens, but it certainly isn’t a practice of LivingSocial”.  Okay, so does this mean that the company is doing it?  Is the spokesman saying if LivingSocial does inflate prices “so what”?

Boy, Groupon and LivingSocial really do not know who pays their bills.

 
What in the world is wrong with these companies?  Don't they realize the average investor has been burned so many times by hype  that folks will be digging deep into their sales pitch?
PJLouis PJLouis
10/17/2011 
"Analysts now suggest the valuation will be lucky to be more than $10 billion."
gdt gdt
10/18/2011 
$10 Billion?  I would think less.  I doubt we have heard the last of the discount scandal.

As for Goldman Sachs not seeing the red flags.  I will admit I was taken in by the pitch and then I started to look behind the veil of nonsense after I heard rumblings about the company.

However, Goldman Sachs is supposed to be filled with the best and the brightest.  If they did not see the red flags, they are either incompetent or are praying no one else saw what many others saw because they are standing to collect hundreds of milliosn of dollars.
PJLouis PJLouis
10/19/2011 edit 
The more I think about it the more I am concerned that the "average investment banker" has become nothing more than a salesperson looking to make fees.

The red flags, which have become public are horrendously obvious red flags and yet the underwriter did not notice them or even think they were improtant?

Red flags aside, let us not forget that the company's business plan and revenue model are filled with holes; really big holes.  I had focused on the business plan and revenue model deficiencies first before these other red flags.  Read my past posts.  Given everything that has happened to this company I am still surprised the company is going forward with the IPO.
PJLouis PJLouis
10/19/2011 
There needs to be legal liabilities put on the offering firm for not doing proper due diligence.   Hold them financially and criminally libel.
gdt gdt
10/19/2011 
If I sell you a toaster that catches fire (and know about) it, I'm both financially and criminally libel.   How is selling you an IPO product any different?
gdt gdt
10/19/2011 
I agree
PJLouis PJLouis
10/21/2011 
The daily deals company plans to sell 30 million shares at $16 to $18 a pop, which would see Groupon raise between $480 million and $540 million. This would give Groupon a valuation as high as $11.4 billion.

As rumored yesterday, the Chicago company will trade on NASDAQ, under the ticker ‘GRPN’.
gdt gdt
10/21/2011 
$11.4 Billion !!!! Someone needs to ask the CEO of Groupon if the reduction in op ex and marketing expenses is a temporary measure designed to help promote the IPO or is this part of a real business strategy.
PJLouis PJLouis
10/22/2011 
"Groupon is a disaster," says Sucharita Mulpuru, a Forrester Research analyst. "It's a shill that's going to be exposed pretty soon."

Seems you are not alone in this opinion ...
gdt gdt
10/23/2011 
Vindication.  A big name firm agrees with me.
PJLouis PJLouis
10/23/2011
 
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