What's The Best Way To Profit From Groupon's IPO?

Reggie Middleton's picture

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wstrub's picture

How Sweet it's Not

 

A wildly successful Groupon (GRPN) promotion wiped out a year's profit for a small British bakery that had to hire outside to fulfill orders for 102,000 discount cupcakes.

 

The "Need A Cake" bakery in Woodley had offered 12 cupcakes, which normally cost around $40, for $10 or a discount of 75%.

 

Owner Rachel Brown, who normally fields about 100 orders a month, was swamped with 8,500 orders before she bailed out, the BBC reports. "As soon as we were making, packaging and sending the cakes out we were on to the next order. It was non-stop."

 

Brown figures the extra help she had to hire cost $19,500, or about a full year's profit. "Without doubt, it was my worst-ever business decision," said Brown, who has run the bakery for 25 years. And without a doubt, Brown said she "will not be doing this again."

 

Finnykins's picture

Serious.

If you disagree with his self gratitude then fine a better way of expressing yourself that going against a stated trade when the real message of the text is to pay attention to fundamental accounting. I appreciate anyone who puts forward lessons to protect and increase ones wealth especially in such a high level as his standard as is Reggie's work. 

Respect eachother going forward.

kaiserhoff's picture

What does Groupon and The Matrix have in common?

Reggiecide of the King's English?

Haddock's picture

Underwrite it - JPM did, and 'made' $17m

Arthur's picture

I hear what you are saying but, assuming the Groupon understood their accounting hijinks, why wouldn't they have sold out to Google when they had the chance.  Were they drinkin gtheir own coolaid?  Why risk the inevitable collapse?

bill1102inf's picture

You would really short a $23 low float stock??? Seriously?

Hold on.

 

You can not find a better use for your leverage than shorting a $23 low float recently IPO'd stock? 

J 457's picture

Buy OOM long dated PUTS if you believe GRPN is heading down.  Or short and spend the next several months with sleepless nights wondering if GOOG or AAPL will consider making a bid.

kaiserhoff's picture

Exactly.  How high is up if the algos and the momo crowd start shoveling smoke?

Alea Iactaest's picture

So IF you must (big big IF) then one word tip: straddle

oddjob's picture

Why not?...he's only down 50% on his MS short.

Reggie Middleton's picture

Exactly what is my "MS short"? If I was short MS, chances are I would have made a bundle. Perhaps you should research a little before commenting. As for GRPN, the stock peaked at $28 IPO and is 23.92. Fundamentals actually do mean something sometime. You can book profits right now if you were anticipating the banker induced pop, and going bearish on the way down. All told, not that bad a short term risk adjusted trade, albeit a trader I am not.

oddjob's picture

I do research, but it becomes more difficult when bloggers remove their entries that were totally wrong.

Finnykins's picture

Always appeciate you sharing your accurate balace sheet analysis Reggie. Commenters here use the privelage to hit writers in the kidney. Really great use of such a good facility ZHers.

Finnykins's picture

Always appeciate you sharing your accurate balace sheet analysis Reggie. Commenters here use the privelage to hit writers in the kidney. Really great use of such a good facility ZHers.

Blythes Master's picture

Seriously?

I guess that I'm the only one around here that grows tired of watching Reg pat himself on the back over and over and....

 

We get it Mr. Middleton, you rock.