Please read the following article and blog about it by class time Tuesday. Be sure to think about everything we talk about in class.
Also, please think/blog about the following quote from the article and what it may mean:
Groupon said it had "determined that projected cash flow from future operations would be sufficient to support our growth strategy."
http://www.chicagotribune.com/business/technology/chi-groupon-prices-ipo-expects-to-raise-abot-540m-20111021,0,6271092.story
One thing that I took from the article was that Groupon is planning to become a public company. However, the IPO is not as large as what was once believed to be. Instead of the IPO in the 700 millions it is instead going to be in the 500 millions. Which is still a ton of money and it brings their price per share to around 17 dollars. I believe that for a company becoming public this is still a great worth for the company. What surprised me was how big the company is. I have heard of Groupon, but I did not think that they were that large of a company to have a worth like that. One thing that led to less money was that analysts questioned whether or not the company is viable. Therefore, questioning that if Groupon could keep their growth at a constant pace. Lately, the company has realized great revenue returns and that is one thing that has led to them wanting to bring the company public. After reading this article one this is clear, and that is that Groupon still needs to prove people wrong and continue large profits so that their stock continues to grow.
ReplyDeleteHello everyone,
ReplyDeleteThe article about Groupon's IPO was a good read. It amazes me that the key people Andrew Mason and Eric Lefkofsky turned down Google's $6 billion buyout offer. I understand these guys want to control where their company goes and all, but that payout is significantly large and deserves another look, especially when Groupon has been losing millions per quarter. I like how Groupon has outstanding customer growth with 140 million or so subscribers and a good business plan, but there are many problems.
First, their accounting techniques are in question by many. How can you not toss in the expenses in your revenue calculation?
Second, how are they going to sustain this growth?
Third, competitors are rising and Groupon is not as strong outside of the U.S.
Fourth, the merchants aggressive tactics have shunned companies from doing business with them.
Lastly, there are just too many questions and uncertainty. Not accepting that buyout will be a dumb decision in retrospect years from now.
This article illustrates the process that Groupon has taken to become a public company and the missteps that have occurred along the way. The company was originally hoping to raise between $480 and $540 million now even though they originally wanted to raise $750 million. By decreasing their goal by so much it makes the worth of the stock come into question. If within four months the value dropped by half is it a good stock to invest in? Also this article makes the business practices questionable. Currently they are struggling with entering the global market which could prove to be detrimental in the future growth of the company. There are only so many people that they will reach domestically and in order to continue the growth they need to grow internationally. Overall Groupon is doing well now, but whether they will succeed in the future is questionable and they certainly need to work on creating more certainty for their growth strategy because it seems like they are leaving a lot to chance.
ReplyDelete-Maire
This article was very interesting, especially considering the view from the prospective buyers of these shares that are available to the public. When reading this article, I started to think about how long Groupon has been in business and how long it actually took them to start initially IPOs. Were they actually planning on selling their shares for this little, or was it because their company "hit a bump" and couldn't get around it. Groupons figures on what they hoped to raise as a company is continually decreasing, but hopes are being held out on the shares. This company really needs to grow soon before the effects really start to become detrimental to Groupon. All of the problems that the company is currently facing, may not even be in the picture if they can't get their company to grow.
ReplyDeleteThe article on Groupon's IPO seemed to be pretty interesting. It becomes pretty clear that Groupon and the head people behind the company have decided on making a low IPO. It seems to be a pretty risky plan as well. I really agree with Papa Gasapo has said. I get that these guys want to control their company's destiny but that kind of offer from Google definitely deserves another shot. I feel there is way to much risk and uncertainty involved to make a decision like this.
ReplyDeleteGrex= Mike Grieco
ReplyDeleteOne of the most interesting things that I took from this article was the fact that Groupon turned down an offer from Google. The $6 billion deal is around $4 billion more than what Groupon expects from the IPO. In my opinion, it shows that Groupon was weighing their options at the time and realized that they could have a higher valuation without a word of the IPO. The final statement in the article is important because it enables the reader to realize that not only is the company thinking about immediate reward, they are talking in terms of how their future cash flows support their current strategies.
ReplyDeleteIt was pretty neat reading about the things we learned in class, such as IPO and being able to relate what we know to the article. I think it is a good move for Groupon to go public in order to raise alot of funds needed to help the company. However, like other people said already, I don't think they will do the best at sustaining that growth. Overall a good article, especially to make you think about what Groupon is doing and what the future will hold for them.
ReplyDeleteDominic M
Gropons projected growth seems a bit questionable to me. With losses the last few quarters and a projected volatile stock price keep me wondering how Groupon plans to keep a consistent growth rate. If Groupon seems to think that their projected cash flow from future operations would be sufficient to support our growth strategy their marketing towards new customers will have to grow their customer base substantially. On the positive side if their IPO was lessened from 750 million to the 400-500 range they must be experiencing a positive quarter due to aggressive marketing campaigns.
ReplyDeleteGroupon seems like a very interesting company, and at times in the
ReplyDeletearticle I didn't feel like it was a company worth buying. With a recent
net loss, the company seems to be getting in over it's head in
anticipation of the IPO. Plus, it's a little disheartening all the legal
issues they've been running into, and the lowering of the net amount of
financing they will actually get out the IPO. Nonetheless, it is a
growth stock and the company will grow in the future as it establishes
relationships with bigger counterparts and other firms. They did
reconcile their losses with reasons of setting up discounts with higher
companies, and this is believed to flatten out and eventually steady
their growth. Groupon is definitely a company I'd look out for come next
year, because there are going to be a lot of people wishing they would
have bought it!
-James T
What I took from this article is how much this state of volatility on the market can affect every company in different ways. Groupon was affected on its IPO, because its beginning amount it was handling to get from it was around 700 millions in June and now is only 540 million. Lets now forget they were affected by themselves too; many missteps in the pre-IPO paper works and actions by Chief Executive got them under fire. But while experts were expecting the IPO to be even higher than the 700 plus millions we get to see these reactions to a volatile market.
ReplyDeleteThe article on Groupon was very interesting. Like many others have mentioned it is surprising that they would turn down an offer from Google. Also, with making their company public they make a lot more money but wont that only last for so long? How do they plan on keeping a constant growth over time if they plan to make such decisions? Also, I found it interesting that because of there marketing executives they were able to have a positive quarter. It is amazing to see what a little advertising can do for a company.
ReplyDeleteFrom reading the article on Groupon, I was able to get an understanding of the steps the company has taken to become public and also understand the mistakes that were made along the way. While Groupon is overall doing well, the future of the company and whether they will be successful is definitely questionable. It is clear that Group needs to work on creating a stronger growth strategy because their current one does not seem very secure. While they made some steps to become part of the global market they are seriously struggling and they need to get their orders in affair if they are going to save the future of their company.
ReplyDelete-Gillian K
What I mainly got from this article was that Groupon is becoming a public company. I actually never knew that they were not already, but it was interesting to see how big they actually got. It was some what surprising that they turned down a $6 billion offer from Google, but at the same time, they must have higher expectation for their company. I myself have used Groupon in the past and they have some really good deals for local restaurants and other things. So believe that they are going to do very well.
ReplyDeleteThe article on Groupon’s IPO was very interesting. The executives at Groupon made a decision to make the IPO at a very low price. This IPO could be very risky to the company and affect it for a long period of time. This was an attempt to grow the company. They were attempting to grow the company at one instance rather than over a period of time. There are many legal issues regarding this company and I don’t know if I would buy this companies stock at this point, but may consider it in the future.
ReplyDeleteJohn D
I was initially surprised that Groupon would turn down a buyout from Google which would be approximately $2million more than the public offering is going to raise. Another interesting thing is that their IPO dropped from 700 million to about 450 million which buyers should see as a caution. This shows that something went wrong and maybe everything did not go as planned with their IPO. Instead of slowly growing their IPO and company, they were going to take a shot at doing it all at once and that seems to be what has backfired since June.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteI found this article very infromative and was intresting to see the view from the prospective buyers of these shares that are available to the public. When reading this article, I wondered if it was Groupon's intial plan to sell their shares, or that they just it rough patch that was unfixable. I thought they may have taken the easy way out on this problem. Also, Groupons numbers contiue to decrease as time goes on, and are relying on their shares to bail them out. Groupon needs to drastically make changes in otder to stay in the positive and be around for a long period of time.
ReplyDeleteI was just caught off with the initial quote that said "determined that projected cash flow from future operations would be sufficient to support our growth strategy" Projections that's a tough sell, as we mention in class when reviewing stock we look to the past. There is a risk associated with everything so you need to minimize that risk. Also I was suprise to hear the the company is trying to sell 30 million shares which only represents 5% of the total number of outstanding shares. This company must have some big plans in the future. Being a marketing major this number also stood out to me "According to the prospectus, marketing costs were $613.2 million in the first three quarters of 2011, representing 22.3 percent of gross billings. In the comparable period of 2010, the company's marketing expenses totaled $89.6 million, or 27.2 percent of gross billings." Percentage of the marketing budget has changed a little but the expenses for marketing changed greatly. That's a big jump that if the marketing doesn't work out then you will be in a big hole.
ReplyDeleteIt makes sense to me that Groupon turned down the offer of $6 billion from Google, but it seems strange that they would settle for the lower amount of money to raise. Judging by all of the volatility that could arise, I would say that Groupon is probably not the best stock to invest in. They haven't even had the IPO yet and are already having many major issues, which is why I'm skeptical that it will work out. The article makes it seem that Groupon has been growing quickly, but how long can that growth last? It certainly couldn't continue for years. The statement made about the cash flow from future operations being enough to support Groupon's growth strategy doesn't seem likely. Even though they had a lot of revenue in the last period, they recorded a net loss. The same for the last two periods. Groupon seems very sketchy to me and I don't think I would ever invest in such a stock.
ReplyDeleteAfter reading this article, I did some further research as too what service Groupon offered. Basically they are a form of a "timeshare." In my opinion this is a good market, because people are always looking have life experiences they have not had before. Plus, it supports the small businesses. Luis, touch on the volatility of the market and how it influence Groupon. He has a good point; Groupon had an initial IPO of 750 million and eventually scaled back to 540 million. This for sure did not ignite potential shareholder confidence. Also making mistakes in filing the pre-IPO paperwork didn't do them any favors. With that said, Groupon still has a chance to turn some heads on the NASDAQ. At 17 dollars per share and a lot of room for growth, people will be willing to take a chance. Groupon also said that they do not expect to use any of the IPO proceeds during the next 12 months. This conservative move by CEO Andrew Mason shows that he is looking to the future.
ReplyDeleteI enjoyed reading the IPO article, it really shows how everything in our class relate to what is really going on in the business world. I can see why they didn't accept the 6 Billion dollars from google, and also reduced the amount they were raising that started at about 750 million to about 500 million.
ReplyDeleteI found this article extremely interesting, it was able to put IPO into a much better prospective. I thought it was pretty questionable when this company issued their stock at such an insignificant amount, seems extremely risky. The volatile nature of the market showed its true colors when the amount of the IPO decreased from 700 million to around 500 million. If anything can be taken from this article, it would be a "how not to go public" guide created by Groupon.
ReplyDeleteThis article was interesting... but when groupon's IPO was issued they were not being completely honest. Groupon was not incorporating all of their expenses on the balance sheet and misleading the firms information. This article is good to read because it opens our eyes to how some companies can be sneaky just to get investors money. We should know to examine a company fully before investing.
ReplyDeleteIan B.
This article was very interesting to me because I was able to relate finance with something that I use each and every day. I have the Groupon App on my iPhone. Before reading this article, I didn't realize how risky an IPO can be. As I was reading, it seemed like Groupon didn't realize this idea either, at first, since they decreased their IPO by 200 million. Although the company wants to be able to grow their business, it is clear that this is more of an issue and more risky than they thought.
ReplyDeleteThe first thing i noticed from reading this article is the setback that Groupon is seeing in their IPO. This article gave me a better understanding of the term IPO. Whether the company is viable is the question. Analysts are skeptical of their frenetic pace of growth. As an accounting major it interested me to read that Groupon came under fire for a variety of missteps during its pre-IPO process and repeatedly amended its filing documents to restate revenues, reflect changes in accounting and clarify statements made by Chief Executive Andrew Mason in a leaked internal memo.
ReplyDeleteMaking the decision for a company to go public is huge and as stated comes with risks. Groupon originally tries to go public back in june making the measurement of an expected raise of $750 million, but realized now that they can only sell their common stock between $16-$18 per share and an estimated raise of $480-$540 million. Also, interestingly enough they turned down a $6billion dollar buyout offer from Google. After the IPO their company is looking at a net worth of 10.1-11.4 billion, which is more, but with more risks as well.
ReplyDeleteI actually use Groupon so the fact that this article was about them was very interesting. I never took the time to actually find out more information about the company so I was glad I learned so much. Since I receive their emails I had an idea that there company was so profitable. When I began to read the article I was a bit skeptic as to why they would want to decrease the amount of money they would want to raise. Then I understood that this company was not believed to be so profitable and that they decided to go public. When reading that Google had made a huge offer and they denied it, I was very shocked at their decision to deny them. Google is a huge corporation and I actually thought they would pick up on their offer. The fact that they didn't, showed me that they wanted to continue to grow as a company on their own, without having to settle. It also showed me that they were not willing to receive help in order to increase profits. It seems as if they are not one hundred percent certain how to make their company better mainly because they are solely relying on shares at $17 each in order to become more profitable. Then when I read, "determined that projected cash flow from future operations would be sufficient to support our growth strategy", I understood it as they calculated their future profits for the corporation would be reliable enough to help them make certain decisions for their corporation at the current moment. Overall, this article was very informative when it comes to companies financial decisions pertaining to stocks.
ReplyDeleteIt was surprising to mean that when first deciding to go public Groupon though they would being raising about 750 million but later decided they would probably only raise about 500 million. The article also talked about whether the company will be able to keep up its pace of growth because they have been experiencing losses of 10 million. Groupon has been trying to get more subscribers to make sure it’s company will be successful by trying to acquire new subscribers emails. All they struggles that the company is have is questioning whether Groupon will actually be able to succeed once they have gone public.
ReplyDeleteTiffany R
Groupon articles are a very good article about IPO. It surprised me that Groupon turned down $6 billions offer from Google since Google is a big corporation. However, its understandable because Groupon is wildly growing in popularity, and is picking up steam so fast that there is no knowing how much it could be worth in a year; potentially much more than it is now. Also, Groupon decided to make IPO at low price is a risky decision. Instead of growing the company over a long period of time, Groupon attempted to grow the company at one instance. This brings a broad insight for investors that they should consider carefully and fully before investing in a company.
ReplyDeleteThis article is really important because as the market slowly works toward a recovery, we should see more companies going public. Groupon, even among the speculation that they may not last long, looks to make hundreds of millions of dollars when they do go through with their IPO. Groupon seems to have plan, and no matter what is going on, they want to follow that. It is interesting how many of the articles, including this one talk about Groupons aggressive marketing, which may be true, but this article is evidence of free advertisements for the company. Groupon looks like it will make a substantial amount of money in this IPO, since especially in North America, growth has been enormous.
ReplyDeleteI think it was a interesting aricle because its about this up and coming new business that just turned down a buyout from google and are soon going public for their first time and plan on raising up to $540 million. They also recently grossed over $1 billion in revenue for the first time. But I do think there are a couple of red flags to watch out for, firstly when they began filing the documents to go public the estimates were for them to raise $750 million so their expectations drop nearly 30%. They also came under fire because of missteps in the files and kept amending documents.
ReplyDeleteBobby O
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