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Multiple Muppet Mashing Leaves Groupon Shareholders Holding The Bag After 89% Off IPO Coupon

Reggie Middleton's picture




 

Following up on the post of Tuesday, 14 August 2012, Muppets Get MASHED Once Again - Groupon Half Off Share Price Coupons Selling for 20 Cents On The Dollar!!! Groupon is now trading at $2.61 after its most recent earnings announcement. We warned pre-IPO that this stock was pure trash. Let's see how that warning panned out... (spoiler alert: free BoomBustBlog Anti-sell side research available for download below)...

GRPN fallsGRPN falls

An 89% drop since the IPO. For those not paying attention, that's damn near all of the share price... disappeared! You could have made a fortune selling this. You may have even made a dollar or two litigation with the issuers or the company itself. Don't forget,  At least eight brokerages slashed their price targets on the firm. Where were these firms when we were warning pre-IPO? 

Here are some key highlights: Groupon restates revenue, EXACTLY as I warned just three months earlier.

  1. Monday, 26 September 2011 What's The Best Way To Profit From Groupon's IPO?
  2. file iconGroupon Revenue Restated 09/26/2011
Groupon starts trading on the Nasdaq via IPO...
  1. Sunday, 13 November 2011 I Hope You Groupon IPO Investors Got Coupons At The IPO!!! Yeah, That's Right I Was The First To Say It
Favorite hits from said documents...
Groupon_revenue_restated_Page_1_copyGroupon_revenue_restated_Page_1_copy
Groupon_revenue_restated_Page_2_copyGroupon_revenue_restated_Page_2_copy
Groupon_Valuation_redacted_Page_03_copyGroupon_Valuation_redacted_Page_03_copy
Groupon_Valuation_redacted_Page_04_copyGroupon_Valuation_redacted_Page_04_copy
Groupon_Valuation_redacted_Page_05_copyGroupon_Valuation_redacted_Page_05_copy

You know that you really don't have to follow eight brokerages to make money on Groupon. All you really had to do was subscribe to BoomBustBlog, reference For Those That Want To Take A Peek Inside the Professional BoomBustBlog Paywall, Here's All of My Groupon Research - MUPPETS!!!

I have commented ad nauseum on the percieved need to do business with name brands, those who do God's work, and those who simply cannot trade - muppet masters and all - as I clearly articulated on the Max Keiser show last week.

... and on previous shows. 

Now, all of you Goldman, Morgan Stanley, et. al. lovers, don't get your muppetware in a bunch, you know that I know that you know that It Is Now Common Knowledge That Goldman’s Investment Advice Sucks???, as excerpted:

It's official, the mainstream media has turned on those "doing God's work" and come to the side of BoomBustBlog.

In case you still don't get it, the sell side research departments of these banks did not offer BoomBustBlog research to their clients. Oh no, then how in the hell can they dump their stock??? They issued glowing reports from their own analytical cum soft sales staff.

On that note, let's reminisce.... In June of 2011 I release proprietary research to BoomBustBlog Subscribers. You can now download said report absolutely free, here icon Groupon Forensic Analysis & Valuation (923.04 kB 2011-06-16 10:34:36). After reading said report, prepare for some real comedy, as reported by Dailypolitical.com:

Groupon (NASDAQ: GRPN) was downgraded by equities research analysts at Stifel Nicolaus from a “hold” rating to a “sell” rating in a research note issued to investors on Monday.

Other equities research analysts have also recently issued reports about the stock. Analysts at Bank of America (NYSE: BAC) downgraded shares of Groupon from a “buy” rating to a “neutral” rating in a research note to investors on Monday. They now have a $20.00 price target on the stock, down previously from $30.00. Separately, analysts at Benchmark Co. cut their price target on shares of Groupon from $32.00 to $28.00 in a research note to investors on Monday. They now have a “buy” rating on the stock. Finally, analysts at Goldman Sachs (NYSE: GS) reiterated a “buy” rating on shares of Groupon in a research note to investors on Thursday, February 9th.

Groupon traded down 3.20% on Monday, hitting $14.54. Groupon has a 52-week low of $14.85 and a 52-week high of $31.14. The company’s market cap is $9.376 billion.

Whoa!!! Goldman Sachs reiterated their "buy" recommendation just in time for their damn Muppet Clients to lose ~40% by the close of the market today. Go ahead, stuff those damn Muppets, fellas!

Groupon_Crash_warningsGroupon_Crash_warnings

For the record, in June of 2011, a full sixteen months ago, I made clear to my subscribers the following (as excerpted from the now free download)...

We value Groupon at $6.6bn using DCF. The current valuation is based on 10 years of revenue projections which are overly optimistic in our view.  We have forecasted revenues of $4.0bn in 2011 and expect revenues to nearly double to $7.5bn in 2012 and reach $35bn by 2020. We have assumed cost of equity of 12% and terminal growth of 3% from 2021 onwards. We have kept gross profit at stable levels and assumed operational gearing to (? Operating Profit / ? Revenue) to improve considerably. Despite these optimistic projections we were still not able to justify a valuation close to $10bn let alone $20-25bn. We only see downside risks to valuation of $6.6bn and believe that Groupon’s rejection of Google offer of $6.0bn was a mistake in first place. Google’s valuation of $6.0bn most assuredly included a premium for synergies that Google could have achieved with Groupon which would be clearly absent in the standalone entity. We see the fair value of Groupon close to $3.0-4.0bn if we assume a more realistic picture. Given all kinds of questions surrounding Groupon’s business regarding the sustainability of revenue growth, costs control and even the business model itself (i.e., the relationship with merchants) and external competition, we remain deeply concerned even on the sustainability of a successful IPO for Groupon. 

For the record, at about $3 per share, Groupon is market-valued at about $2.2 billion dollars!!!! 

There's a WHOLE LOT MORE, but this post is long enough as it is. Simply download the links above, and don't forget to reference the valuation section of original forensic report. There's an early Christmas present in there for the stingy muppets!
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Tue, 11/13/2012 - 21:06 | 2978259 Mediocritas
Mediocritas's picture

I'd love to see a breakdown of exactly who the muppets are. I'm guessing "investors" who really don't give that much of a shit about performance, only volume, for example the bottom-of-the-barrel graduates who couldn't get into an investment bank or hedge fund so instead ran a superannuation fund.

It shits me how in most OECD nations citizens are forced to put earnings into retirement funds. Usually it's an enforced employer contribution, meaning a smaller wage for the employee. Most workers are too busy in their work to worry about the finer details of where their mandatory retirement "savings" are being allocated (although they should spend a few hours figuring it out for their own benefit). That pot of retirement money, which is probably about $30 Trillion globally, presided over by muppet fund managers, is the daily desire of investment banks like GS. The parasites just chip away whatever they can, taking advantage of incompetent, couldn't-care-less muppets, while said muppet managers also take their cut for oh such hard work! 

Tue, 11/13/2012 - 18:16 | 2977748 SilverDosed
SilverDosed's picture

ZOMG who could have ever seen this coming?

Wed, 11/14/2012 - 01:40 | 2977701 EscapingProgress
EscapingProgress's picture

Thinking about the Groupon IPO reminded me of that Facebook IPO thingy. What's the latest news on that? Oh ya...Facebook doomsday is tomorrow, November 14th, when 800 million of Facebook's 2.2 billion total shares outstanding will be unlocked for sale. How low can you go Facebook?

Wed, 11/14/2012 - 01:49 | 2978925 TruthInSunshine
TruthInSunshine's picture

Facebook and Groupon (along with Zynga and many others) will be The Winners of the New World v2.0

I realize some will take umbrage at my suggestion that Facebook is doomed, and will defend it based on its currently large user base, but Facebook will never be able to appreciably monetize said user base (here's a thought experiment: If Facebook instituted a token $5 per month user fee, how many users would close their accounts? I'd venture a SWAG of 85%+), and the trend is definitely not a friend of Facebook in terms of demonstrating effective click-vertising, privacy issues that offend its user base, or time spent on its site by existing user base.

I'm not saying Facebook will necessarily head to $0 (although it's definitely more possible than many are willing to concede) but that it will forever struggle, as it is a mere rehash of failed business models tried and failed in the past (even if on a larger scale).

Tue, 11/13/2012 - 17:54 | 2977688 Overflow-admin
Overflow-admin's picture

It's GONE!

*POOF*

Tue, 11/13/2012 - 17:30 | 2977605 Stubert
Stubert's picture

Didn't Google try to buy Groupon for like a billion dollars?  They got lucky that the greedy guys turned google down and wanted to ipo instead.  Wonder how much that would have affected Googles share price if the deal went through.  Or if they would have found a way to make it profitable.

 

 

Tue, 11/13/2012 - 17:09 | 2977462 Zero Govt
Zero Govt's picture

"We warned pre-IPO that this stock was pure trash."

Wall Street is the sugar coated turd centre of the world ...after the 2000 dot.con and 2007 mortgage garbage both crashed they needed new shit to coat and nothing offers greater scope for hyper-fraud than the tek sector

Tue, 11/13/2012 - 16:03 | 2977202 SILVERGEDDON
SILVERGEDDON's picture

Groupon a new spear and loincloth, and sell off all of that bitch assed chart porn. For fucks sake, anyway. 

Tue, 11/13/2012 - 13:07 | 2976510 swmnguy
swmnguy's picture

Reggie, with all due respect (and I am indeed a fan); One didn't have to subscribe to BBB, or even read your free columns, to know Groupon stock was a great way to end up with a million bucks--provided you started with $10,000,000.  Heck, we didn't even have to know Cramer would love it to know that.

Tue, 11/13/2012 - 15:43 | 2977114 swmnguy
swmnguy's picture

Thinking about Groupon as a stock led me to remember back when Pets.com was the darling of the last bubble, or was that the bubble before the bubble before last?  It's so hard to keep track.

Anyway, my wife is a very smart woman who was raised without money, and has never trusted any form of abstract wealth.  She really only trusts money at all once she's converted it into something she can use, like food or a thing.

Anyway, we were watching TV way back when and a Pets.com ad came on.  She said, "How the hell does that company work?  Why would you buy a bag of dog food on line for, say, $15.00, and then spend $20.00 having UPS bring it to your house?  The stuff is cheap and heavy.  Why would anyone buy stock in that?"  All I could come up with was, "So you can sell it the next day to somebody dumber than yourself, I guess."

Apparently some chick who grew up poor on a farm in North Dakota knew more than top analysts.  Go figure.

Tue, 11/13/2012 - 12:48 | 2976422 Papasmurf
Papasmurf's picture

Reggie, how many times can you beat this dead horse?  

Tue, 11/13/2012 - 17:07 | 2977505 Zero Govt
Zero Govt's picture

7 "i-told-you-so's" is the average

when you're right you're right ...right ..right ...right ..right ...right ...right ...right!

Tue, 11/13/2012 - 12:05 | 2976203 monoloco
monoloco's picture

Hey Reggie, Why don't you offer a groupon to subscribe to your service? 

Tue, 11/13/2012 - 12:14 | 2976252 Spitzer
Spitzer's picture

And a BBBlog app for BlackBerry

Tue, 11/13/2012 - 11:42 | 2976118 adr
adr's picture

Reggie,

Groupon and many of the other recent IPOs are nothing but money laundering operations for vast sex slave, weapons, and or drug rings. Most of the uber wealthy are involved with it. Think about the absolute scumbags that are the "founders" of these corporations. They are perfect bag holders if things go the wrong way. They couldn't make an honest buck if they tried, but can get rich if they allow themselves to act as the transfer mechanism for dirty money.

Dirty money flows to start a corporation, the dirty money is changed into stock certificates, the stock is sold for fresh cash. Dirty money laundered out as worthless stock certificates and the early investors then have clean money in their pockets.

Once you understand this, you see how so many of these garbage companies like Zumiez, Skull Candy, Shock Doctor, Groupon, and others can seemingly come out of nowhere with millions upon millions in venture capital funding without real business plans or anything in the way of real sustainable sales. Then for some reason post IPO the companies dry up.

Is it really that much of a stretch to believe that the entire angel investor venture capital industry is really a cover for the largest money laundering operation in the history of the world?

Tue, 11/13/2012 - 16:15 | 2977264 NuYawkFrankie
NuYawkFrankie's picture

Post O'The Day!

Tue, 11/13/2012 - 12:12 | 2976238 Spitzer
Spitzer's picture

thats a cool story but who's buying these IPO's ?

Tue, 11/13/2012 - 12:29 | 2976328 NotApplicable
NotApplicable's picture

Your retirement fund.

Tue, 11/13/2012 - 16:36 | 2977348 NuYawkFrankie
NuYawkFrankie's picture

Quip O'The Day!

Tue, 11/13/2012 - 14:43 | 2976883 Spitzer
Spitzer's picture

I dont have a red cent in a registered account.

Do pension funds really buy this garbage ? I guess they buy treasuries

Tue, 11/13/2012 - 15:45 | 2977126 PrintingPress
PrintingPress's picture

They are the only ones buying this shit. 

Tue, 11/13/2012 - 15:44 | 2977088 walküre
walküre's picture

The big banks made "buy" recommendations to their clients who have deposited funds in their accounts with these banks. The hedge funds played this crap up and down and probably screwed each other in the process. How much dirty money is deposited in some obscure hedge fund?

I like discussing this angle because we've established the banks are scum. But what is dismissed is the fact that much of the depositors are operating illegal businesses and are just as scummy.

Is it really surprising that there was no major fallout from the bank's bailout? It's all corrupt organized crime. It's all Mafia. Italian, American, Russian, Chinese and so on illegal Mafia which is washing their money through the corrupt banking system which is protected by the LEGAL Mafia ie much of your Congress, Senate and the White House.

Where does Obama fit in all this? Is he a stealth "Robin Hood" going after the corruption or at least redistributing the wealth from the corrupt to the people? How does that compute with one of Obama's biggest mentors George Soros?

The big banks supported Obama in 2008 and he won. They supported Romney in 2012 but Obama still won. The banks did not get their first choice President. I think this is huge. Is the 2nd Obama term a stealth coup d'etat in the making? The banks run everything in this country and their guy didn't get in. When was the last time that happened?

Tue, 11/13/2012 - 16:23 | 2977301 CashIsTrash
CashIsTrash's picture

No, Obama isn't hurting the banks, why?  because the FED is still around and the Bernanke is still going to be chairman..Romney was used as fake competition to Obama and was NEVER ever going to de-throne the champ, why? Romney could never exploit the president's mistakes because he himself approved them/created them.  Obama is being used as a savior, but he is nothing more than a shill and will continue to work for TBTF

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