08/08/2012 07:09 pm ET Updated Oct 08, 2012

Today's Groupon: $31 Of Groupon Stock For $6!

A few days ago, Groupon's stock closed at $6.66, the Stock Quote Of the Beast, or so you could be forgiven for thinking it if you were one of the idiots who bought at $31 shortly after Groupon went public last year. I have little patience with stock analysts who try to explain the market's essentially random movements: "The market continued its downward spiral today as fire-breathing anus-rats infested Wall Street and the City Of London, incinerating investor enthusiasm," or "We're seeing traders running scared on news that Ayn Rand was a psychotic narcissistic horse's ass and objectivism is not a good (or even a real) philosophy to base our economy on." (Yeah, like that's news. But I can see how it would upset traders.) I do have this theory, though, about what caused this Groupocalypse -- and try to pay close attention here, because it might get a little technical: selling coupons is a shit business idea. Sorry to get all Harvard Business School on your ass.

Just a few years ago, Groupon looked like it had the world by the 40 percent-off balls at SportMart. I and everyone I knew loved Groupons, with which we could afford to eat at restaurants otherwise out of our price range, frequent a better class of hooker and get our cavities filled with real fillings by actual dentists and not just have bubble- um and toilet paper tamped into them by street corner toughs ditching classes at the local dentistry school.

We loved those deals so much that we bought hundreds or even dozens of them, from Groupon or one of the Groupon-alikes that leaped into the market, then we forgot that we had bought them until they expired. I remember begging a restaurant manager to please please PLEASE accept both of the Groupons I'd bought, which were going to expire before I could return to the restaurant. (He reluctantly agreed out of the goodness of his heart and also because he feared I was going to sue the place on account of how they accidentally served me trout, to which I'm deadly allergic. My lips look funny and a little scary when they're all swollen like that. My tongue too.) Kickboxing classes sounded cool when I bought the Groupon, but then it occurred to me that I might not be the only one kicking and/or boxing; another person might kick and/or box me, and that just seemed... wrong and rather hurtful, so that one expired. Also, the dentist I used? One of those dental school toughs; he'd graduated. (Still using bubble-gum and toilet paper for the fillings, though.) Overall I probably lost money on all those coupons, balancing the savings from ones I used against the cost of the ones that expired. My experience was not atypical, except maybe for the bubble-gum and toilet-paper fillings.

Also, coupons? Not sexy. A spate of fatuous articles appeared early on about how Groupon had made coupons cool, no longer the province of frumpy soccer moms and fixed-income seniors clipping them out of the weekly shopper. Paper coupons: pathetic. Internet coupons? Way less pathetic! (Not not pathetic, though.) Only as it turned out they were still pretty pathetic. In short order, ending a first date by saying "I have a Groupon!" became the 21st-century version of exclaiming "I live in my parents' basement!" or "I have chlamydia!" (I don't. Either one. Anymore.) You were not a trendsetter; you were a crazy cat-lady in training.

Merchants didn't make out any better than coupon-buyers. Most Groupons give the customer 50 percent or so off, with the remainder split evenly between Groupon and the merchant, who thus takes in a quarter of full price. The idea here: take a small loss to entice new people into your shop who'll then become loyal customers, but in fact 82 percent of the merchants wind up unhappy with the repeat business they get from Groupons, making penny shopper ads and sandwich boards more effective in bringing in new customers, especially if the sandwich board is made of actual sandwiches. (Because mmmmmmm, sandwiches.) Considering how little money the merchant makes on a Groupon, he'll often cheap up what Groupon customers get--e.g., a "seven-course meal" that counts the one-bite amuse bouche and the sherbet as courses, and shrinks all the other courses to miniscule size -- so the customer, rightly pissed off at this cheapskatery, leaves with a bad taste in his mouth, and it's not the sherbet, unless it's that rotting-corpse-flavored sherbet that has become the latest stupid foodie trend in my head. Plus, if your loyal customers find out they've paid full-freight while a horde of one-shot Groupon surfers got a deal, you've pissed them off too, so in that worst case, you lose customers while losing money. A merchant might get her ass kicked other ways too: maybe she receives 102,000 cupcake orders, has to hire extra help and loses her whole year's profits in one go. Woo hoo! If you have a stroke the day your Groupon goes live, it's like winning a trifecta of suck.

So, sure, I'm no fancy stock-picking intellectual like Jim Cramer -- for one thing, he has sound effects. Do I have sound effects? Shamefacedly I must admit, no, sir or madam, I do not, unless you count my stomach rumbling before dinnertime. But even I, sound-effect-less slob that I am, can figure out that exactly no one's happy with Groupon, not their customers, not their merchants and certainly not their shareholders. The SEC calling shenanigans on Groupon's accounting practices didn't help either, nor Groupon's subsequent accounting issues. (We're profitable! We're not profitable! We're profitable! We're not profitable! It's like the ending of Chinatown, but boring because it's accounting.) I have a pretty good idea that Groupon's day is over and they're never pulling out of this death-spiral -- unless they can figure out how to make money selling Groupons on their own stock. At which point, the Universe will implode from the meta of it all, or possibly just out of disgust.

(Disclosure: I worked for a sister company of Groupon some years ago. I hated it.)