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‘I’ve never much liked Groupon…” was how I started my last post in Aug (See – Groupon gets the ultimate discount coupon) More ‘reasons not to like’ were provided last night with continued qoq declines in revenues from discount vouchers and continued losses. Groupon shares fell another 16% after-hours – making an 84% reduction since their IPO. The only bit of Groupon that is growing is their direct sales of bulk buy discount items. Warehouse sales are hardly the route to elevated stock market valuations.
I care about this for a couple of reasons. Firstly, although Groupon was ‘flawed’ it has actually tarnished the whole sector. That is not good for other sound IPOs. Secondly, I am astounded by how many analysts, brokers and fund managers were ‘taken in’ by Groupon. In the early days I fielded many calls and media interviews when I really was the only person ringing alarm bells. I can’t believe that I’m brighter than the lot of them. So why were they all so easily fooled?
