So Groupon is to be the latest in the IPO rush centred around social technologies. The IPO would raise $750m and might see a valuation for Groupon of c$20b. Groupon generated revenues of $713m and made a loss of $456m in 2010- although revenues of $645m were reported in the first 3 months of 2011. So growth is pretty impressive. In the interests of research, I both tested Groupon and tried to ‘stick with it’. But todate have never found any offer I found remotely of interest. But, clearly, others do so it must be just me and my peculiar interests.
But my real worry is how easy the Groupon business model is to copy. I can see the Google and, in particular, Facebook equivalents proving powerful competition to Groupon. The FT article today, however, believes that the Groupon model can expand beyond selling just coupons. “Groupon could become one of the most influencial forces in retail merchandising” – although the quote was ascribed to a Groupon investor!
As readers know, I am a huge supporter of the game-changing nature of the current social technologies ‘revolution’. But I am equally fearful that we are creating a valuation ‘bubble’ of the like we saw with internet stocks in 1999/2000. The problem with bubbles is that when they burst they created collateral and lasting damage. An orderly and fairly priced market is so much more preferable.