Some Groupon Investors Give Up

The Wall Street Journal:

Some of the early backers of Groupon Inc., GRPN +0.84% including Silicon Valley veteran Marc Andreessen, are heading for the exits, joining investors who have lost faith in companies that had been expected to drive a new Internet boom.

At least four Groupon investors who held stock in the daily-deals company before it went public have sold or significantly pared back their holdings in recent months. Since its initial public offering in November, Groupon has shed more than three-quarters of its stock-market value, or about $10 billion.

Groupon's plunging stock price, and the swooning shares of Facebook Inc. FB +3.98% and Zynga Inc., ZNGA +0.83% have rekindled memories of the dot-com bust in 2000. Unlike many dot-com era start-ups, the current companies have healthy revenue and in some cases are turning a profit--but their results aren't matching early expectations.

Read the whole story at The Wall Street Journal

Comments

[jaredbrain]

12:45 AM on 08/21/2012

Well I can't read the story, since for some reason HP's headline story is behind a paywall, but that's okay because I don't really need to read it to know that another overblown tech stock is meeting reality.

[J T K]

04:52 AM on 08/21/2012

Could be worse, at least the Wall Street Journal gives you a snippet, unlike the Financial Times.

[mcmutter]

09:51 PM on 08/20/2012

Groupon = pure crap

businesses go broke giving out useless discounts .....

[jvtrio]

07:09 PM on 08/20/2012

Not surprised in the least bit. Groupon and Living Social might have good bargains for those seeking out discounts, but they are absolutely no good for the businesses using them. These businesses have had time to figure out just how bad of a deal Groupon offers them, resulting in fewer and fewer repeat customers. Take the restaurant business, for example. Groupon is offering a $25 gift certificate for $12. Groupon gets half of the $12, leaving the restaurant with $6 made off off $25 in food. Most restaurants have food costs that are between 32 and 34% of what they make. That $6 results in a loss, just in food costs, not including their salaries and overhead expenses. If the restaurant runs the same deal more than once, the majority of GCs sold the second time will be to the same people that bought them the first time, and many of the people would have been customers without the 'deal' Repeat business is essential for growth, and Groupon does not have a base that will use them more than once, unless they're stupid. It is a fad that has worn itself out.

[barbra1971]

06:47 PM on 08/20/2012

Facebook, Groupon... I told you so.

[spkninglsh]

04:32 PM on 08/20/2012

The good news is that Groupon is offering an incredible coupon on giving up on them.