Friday, November 4, 2011

Groupon IPO: "C'mon" !!!

What am I missing here? This is a company that: a) lost over $200 million in the first three quarters of 2011; b)  is still suffering from bad publicity around its overly aggressive financial accounting standards; and c) has a business model with low barriers to entry and copycat competitors sprouting up everywhere.
Yet, after its first day of trading, Groupon's market capitalization is close to $13 billion. I think this is truly preposterous.  I interpret the market's valuation of this stock as a sign of unwarranted enthusiasm which I hope is an isolated sentiment to Groupon and not indicative of a broader froth in the tech sector. To quote Louis the XV, "Apres Moi, le Deluge."


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