Groupon Heads for Bankruptcy?

They cannot stand another year of this. How could a stock go from over $26 in November of 2011 to $7.77 8 months later is simply astounding... It had hit a high of $31.14 at IPO. From $31.14 to $7.77 is a 70.24% drop!


I warned people in November of 2011 to get out of Groupon in Groupon Stock Holders! Head For the Exits! when the share price was over $23!

But today, folks, Groupon's stock hits lowest level since IPO: $7.77 (I think, in this case, three 7s is NOT a lucky number!)

But maybe there's some good news for investors in there?

Yahoo Finance reports: Groupon's stock hits all-time low amid worries about site traffic, exposure to Europe

In addition, a Citi Investment Research analyst expressed some concerns about Groupon's exposure to Europe and its weak economy. 

Exposure to Europe, yeah? Well, that can't be good! But maybe there's a silver lining?

The Motley Fool writes: Groupon Crashes to New Low: What Investors Need to Know

Groupon continues to underperform the group. This is the second time this month that the stock has tumbled. On July 2 shares slid on news that Groupon Chairman Eric Lefkofsky was taking a step back from his role at the company. It's discouraging to see a Groupon co-founder turn his back on the company at such a critical time. In hindsight, Groupon shouldn't have turned down a possible takeover by Google (Nasdaq: GOOG  ) for a rumored $5.3 billion.

However you cut it, things don't look good for the daily deals site. Concerns over the financial health of the business are nothing new. Not only do I think the current stock price is well deserved, but I also have little confidence in management's ability to turn things around. I stand by my underperform CAPScall on the stock.

Gee? That article didn't have the happy ending "feel good talk" I was looking for.... Maybe this one will?

All Things reports: Free-Falling Groupon Has Its Problems, but Bankruptcy Talk Is Bunk

As the stock continued to slide, a Reuters report suggested the collapse had to do with economic weakness in Europe, where Groupon gets about a quarter of its revenue. Sameet Sinha, an analyst at B. Riley & Co., told the wire service, “Europe is a concern, obviously.” But Mahaney was less concerned about Europe, saying that there’s not much evidence it will cause a material risk to estimates. Rather, he tweaked his price target because of lower 2013 estimates.

Additionally, the stock has not yet stabilized since last week when Eric Lefkofsky, Groupon’s executive chairman and co-founder, said he had stepped back from day-to-day work with the company so he could devote more attention to his venture capital firm, comfortable with that step given the recent additions to Groupon’s executive team.

Groupon is expected to report second-quarter results in late July or early August.

No. That didn't sound too good at the end either! You know that when the bankruptcy talks come out and are denied, then there's smoke in the room.... Maybe fire in the kitchen....

-70.24 percent since IPO

Perhaps my prediction of under $5 a share in December is too high? 

Groupon has to be one of the greatest stock failures in history.... How will Facebook find a way to top that?

But, ultimately, smart old Mike, who can call stocks like Jimmy the Greek can call sports results can only chortle like a sick rooster. When I chuckle about this stuff and then look at the gold prices and see them depressed (not nearly as bad as this, though) my wife says,

"Yeah? If you are so smart, then why ain't you rich?"


NOTE: Groupon in Japan must be doing worse, actually. I haven't seen a Groupon advertisement in months. They've dropped off the map in japan and I hear nothing positive about them from women's magazine people and former users.

40% Facebook's supposed 900 million alleged users don't exist?

Another one from the "No way. You've got to be kidding me!" file.

If I hadn't already laid out a litany of reasons to stay away from stocks like Groupon, Facebook and the rest of everything that has any whiff of so-called "Social Media" involved with it, here comes another reason:


"Spammers create as many as 40 percent of the accounts on social-media sites...."


So that means that 40% Facebook's supposed 900 million alleged users don't exist?


Bloomberg reports in: ‘Likejacking’: Spammers Hit Social Media: 

“Social spam can be a lot more effective than e-mail spam,” says Mark Risher, chief executive officer of Impermium, which sells anti-spam software. “The bad guys are taking to this with great abandon.”

Spammers create as many as 40 percent of the accounts on social-media sites, according to Risher. About 8 percent of messages sent via social pages are spam, approximately twice the volume of six months ago, he says. Spammers use the sharing features on social sites to spread their messages. Click on a spammer’s link on Facebook, and it may ask you to “like” or “share” a page, or to allow an app to gain access to your profile.

Woo-boy! Did I say "Facebook shares in the mid-20s by December?" I did. Good. But I was wrong. Look for the mid-10s! 

That's where it's going!

Read more:  ‘Likejacking’: Spammers Hit Social Media

Groupon Stock Holders! Head For the Exits!

In what, I'm sure will be the second to last post I ever make about Groupon, and how much of a dog company I think it is (the last post will be a "I told you so" when Groupon becomes a penny stock), I'd like to show you Groupon stock performance over the past two days.


Pretty shocking stuff. Especially if you own shares in this company!


On Monday, Nov. 21, 2011. The Dow Jones Industrials (DJI) had a bad day dropping 249 points or -2.1% to finish at 11,454. The NASDAQ Composite Index (IXIC) closed 1.92% lower at 2,529.14. On the other hand, Groupon (GRPN) had an even worse day by dropping almost 10% and another nearly 1% after-hours! See chart:

Today, Tuesday Nov. 22, 2011 (USA time) it wasn't as bad as yesterday's market saw the DJI down 53.59 or -0.49% to finish at 11,493.72. The NASDAQ closed 1.86% lower at 2,521. But! Groupon was one of the top three losers for the day dropping a whopping 3.51 or -14.89% to close at nearly their IPO price. The final closing was 20.07.

Head for the life rafts! If anyone knows where or how they can short GRPN shares, please comment and let us all know. Opportunities of a lifetime, like this one, don't come very often.

As I have written over and over before, a business model built on SPAM mail isn't a good business model at all. They should have built a portal. They should have taken Google's $6 billion dollar offer.

I'll make a prediction here: GRPN stock price will be under $5.00 by December 15, 2012 (maybe $1.00?) So if you want to be stupid and "BUY" then wait for their 60% off Groupon share price coupons! (Or, as Karl Denninger says, "There's crazy and then there's really crazy!") 

UPDATE: Zerohedge writes, "Groupoff - Groupon back to IPO price":

As of this moment, everyone who has bought and held GRPN stock since the IPO price is at best flat, and almost certainly at a massive loss, as only a few banks were allotted shares at the $20.00 offering price, which were quickly flipped to subsequent greater fools. As of this moment, GRPN is back to the IPO price or precisely $20.00. We expect once this is taken out for the one way Grouponzi Red Light Special to fair value, somewhere around $0.00, to take a few months at most.

PS: I have made some really good bucks buying and selling stocks over these 35 years... Actually, only three. I've only ever bought three times. I won big three times. Great opportunities only come once every ten years or so (unless you have insider information) one day soon I will write about these exploits. I found these chances of a lifetime just simply from reading the news. You can too. Sometimes things are just painfully obvious. As a loser, Groupon was one of them.

Had I been able to invest huge money instead of my piddling amounts, on the good ones....I might have been rich!

Or as my wife says:

UPDATE 2: Groupon was the #2 biggest drop on the entire NASDAQ today according to Yahoo Finance:

NEW YORK (AP) -- A look at the 10 biggest percentage decliners on Nasdaq at the close of trading:

School Specialty Inc. fell 26.4 percent to $5.17.

Groupon Inc. fell 14.9 percent to $20.07.

First Clover Leaf Financial Corp. fell 11.6 percent to $5.74.

Viasystems Group fell 10.9 percent to $15.77.

ID Systems Inc. fell 9.7 percent to $5.14.

Mackinac Financial Corp. fell 9.6 percent to $5.00.

Technical Communications Corp. fell 9.6 percent to $7.17.

Forbes Energy Services Ltd. fell 9.2 percent to $5.35.

KIT Digital Inc. fell 9.2 percent to $9.52.

Lihua Intl fell 8.8 percent to $5.36.

UPDATE 3: Another from Zerohedge:

Yet another fatal flaw in GRPN's business model is revealed to the sheeple IPO buyers.

Bakery Burned in Groupon Deal for 102000 Cupcakes

‎ - International Business Times

Groupon Stock Price Drops Over 14% in Three Days!

The stock market had a real bad day today because of Eurozone and Italy worries and things there are going to get worse. Nevertheless, after Groupon's IPO, even with the Bear Market rallies, Groupon has been a loser three days in a row. 

Nov. 7, 2011. Dow Jones rises 0.71% yet Groupon drops 0.54% (after hours drop another 0.85%)

Nov. 8, 2011. Dow Jones rises 0.84%... Yet Groupon drops a massive 4.12% (after hours drop another 0.12%)

Today, Wednesday Nov. 9, 2011 (USA time) Dow Jones takes a beating on Euro news and sinks 3.20%.  Groupon decline accelerates and drops another massive 3.53% (after hours drop another 0.08%)

In three days, Groupon shares have lost 14% of their value. I predict Groupon is heading for penny stock within 2 years. This is a serious opportunity to short this company stocks.

On top of that, the news is all bad for Groupon. From the Wall Street Journal just today!:

Merchants Grumble Over Groupon Late Payments

Competitors are threatening the daily deal site leader by offering quicker payment to merchants, possibly jeopardizing a key part of the company's business model.

Groupon, which offers online deals for local merchants, keeps itself in cash by collecting money immediately when it sells its daily coupons to consumers while dragging out payments to the merchants over 60 days.

As I have said many times before, the Groupo business model won’t work. All business deals, in order to be successful, must be beneficial for all sides concerned. The business owners who make deals with Groupon lose out big time. 

From that same article:

"The payment timing is so erratic you can't count on any of that money helping to pay your bills," says Mark Grohman, owner of Meridian Restaurant in Winston-Salem, N.C.

After running three Groupon promotions this year and last, Mr. Grohman says he won't use the service again in part because it puts too big a strain on his cash flow. "With smaller margins in restaurants, you need that capital in the bank as fast as possible," he says.

Heissam Jebailey, co-owner of two Menchie's frozen-yogurt franchises in Winter Park, Fla., says he also has begun to view Groupon's installment payments as too slow.

"You want to get paid in full as quickly as possible," says Mr. Jebailey, who has run deals with both Groupon and its rival LivingSocial Inc. offering customers $10 of frozen yogurt for $5. He says both promotions were successful but that he'd only use Groupon again if the service promises to pay faster. "We're the ones that have to cover the cost of goods for giving away everything at half price," he says. "I will not do another deal with Groupon unless they agree to my terms."


Here's a video from Market Watch that came out today, too. Groupon's Payment Lag Irks Merchants: