What Twitter, Yelp, Groupon, Bankrate and Web.com Have in Common with Your Pet

Capitalist Exploits's picture

By: Chris Tell at: http://capitalistexploits.at/

I've been thinking about pets a lot lately. We have a couple of them. We've managed to have cats for years, and always found someone to watch them while we country hopped. Dogs are much tougher, so we held off for quite some time.

Our travel/expat lifestyle hasn't exactly been conducive to looking after pets in general, and dogs in particular. That being said, we have recently introduced one into our household for a number of reasons, not the least of which is because, hey, he's cute, fluffy, the kids love him and all their friends have one.

Pets are a great way to introduce kids to responsibility. They require feeding, love and attention, yet you don't get anything "tangible" back. I mean nobody can point to an "object" and say, "I got that from my poodle." Well, maybe you can point to your chewed up slipper or the vomit on the carpet...

Instead of the tangibles there is the intangible that they hold a special place in our heart which can't been seen by others. They are like another member of the family. Eventually, since the traditional pets, namely cats and dogs don't outlive us, we will find ourselves grieving as they pass on, or we have to put them down in their old age.

So, why have I been thinking so much about pets lately? Well, they remind me very much of the companies I'm going to present to you in a moment.

Like your pet, these companies require constant feeding in order to stay alive.

Like your pet they will probably vomit on your portfolio, and like your pet you'll be grieving when they're eventually put down and they disappear into the vortex of used up, run out of puff companies who's shareholder base finally gives up and buries the once loved.

Let's proceed, shall we...

Twitter, Inc. (NASDAQ: TWTR)

Twitter provides real-time short messaging and multimedia messaging services that work over multiple networks and devices. The Company offers users the ability to write short text messages (Tweets) and to follow other users' activity. A Tweet is up to 140 characters long and can include photos and videos.

How we all lived without this (or any of the below) life-saving technology is one of the greatest mysteries of modern times!

Here are the stats on this 3,000 employee strong company:

  • Market capitalization: $22.61 Billion
  • Stock price: $38.33
  • 52-week range: $29.51 - $74.73 - Yes indeed, a high of $74/share. It sure is cheap now!
  • Price to Book: 7.44
  • Price to Sales: 28.23 (cheap, really cheap)
  • ROA: -0.346
  • ROE: -0.542
  • P/L 2013: -$645.32 Million
  • P/L 2012: -$79.4 Million
  • P/L 2011: -$128.3 Million

Yelp, Inc  (NASDAQ: YELP)

Yelp Inc. operates a social networking, user review, and local search web site. The Company provides the site as a guide for online search capabilities for its visitors to find reviews and details about local businesses. Yelp provides listings for businesses throughout the United States and Canada.

Vital stats on this 2,145 employee company:

  • Market capitalization: $5.06 Billion
  • Stock price: $70.62
  • 52-week range: $37 - $101.75
  • Price to Book: 10.06
  • Price to Sales: 19.22
  • ROA: -0.021
  • ROE: -0.023
  • P/L 2013: -$10.07 Million
  • P/L 2012: -$19.11 Million
  • P/L 2011: -$16.67 Million

Groupon Inc, (NASDAQ: GRPN)

Groupon, Inc. operates a shopping website that shares information on local goods, services, and cultural events for businesses and consumers across the World. The Company provides information on attractions to see, do, eat and shop.

Here are the stats from this 11,283 employee juggernaut:

  • Market Capitalization: $4.49 Billion
  • Stock price: $6.58
  • 52-week range: $5.18 - $12.76
  • Price to Book: 5.44
  • Price to Sales: 1.64
  • ROA: -0.063
  • ROE: -0.165
  • P/L 2013: -$95.39 Million
  • P/L 2012: -$67.38 Million
  • P/L 2011: -$373.5 Million

Bankrate Inc, (NASDAQ: RATE)

Bankrate Inc. is a publisher, aggregator and distributor of personal finance content on the Internet. The Company provides consumers independent and objective personal finance editorial content across multiple vertical categories including mortgages, deposits, insurance, credit cards, and other categories, such as retirement, automobile loans, and taxes.

The stats on this relatively "lean" 488 employee organization:

  • Market capitalization: $1.86 Billion
  • Stock price: $17.76
  • 52-week range: $14.44 - $23.14
  • Price to Book: 2.96
  • Price to Sales: 3.83
  • ROA: -0.011
  • ROE: -0.016
  • P/L 2013: -$10 Million
  • P/L 2012: $29.33 Million
  • P/L 2011: -$13.42 Million

Web.com Group Inc, (NASDAQ: WWWW)

Web.com Group Inc. provides full-service web site solutions to small businesses. The Company offers marketing, e-commerce, and various other services.

Employing 2,000 people and here's the rest of the vitals::

  • Market Capitalization: $1.41 Billion
  • Stock price: $27.32
  • 52-week range: $25.21 - $37.72
  • Price to Book: 7.9
  • Price to Sales: 2.77
  • ROA: -0.015
  • ROE: -0.119
  • P/L 2013: -$65.66 Million
  • P/L 2012: -$122.22 Million
  • P/L 2011: -$12.31 Million

Taken as a whole, the 5 companies above collectively threw off a whopping -$826.4 million in cash flow last year! Despite that horrifying number, with any luck, and the increased competition in all things "social media", they will sport ever higher market capitalizations this time next year.

We strongly recommend mortgaging the house, your cars and possibly selling a kidney in order to get positioned NOW! Of course that's sarcasm, for those that might think us serious.

I have no particular insights into these companies beyond the fairly cursory, numbers-based look presented above. Does anything else really matter anyway, in the long run? Recently however, as I mentioned in "A Bull Market in PR" when discussing Snapchat and the VC world's infatuation with social media, the overall zeitgeist of this market is eerily similar to the Dot.com years, pre-Dot bomb!

Whether this ends in the same way or not, we have yet to see. One thing is certain, the CEOs and early investors in these companies have certainly benefited in a very tangible way from their "pets", aka retail investors.

- Chris


"There's a danger in the internet and social media. The notion that information is enough, that more and more information is enough, that you don't have to think, you just have to get more information - gets very dangerous."  - Edward de Bono

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pashley1411's picture

Meh, tech has always been the rare diamond buried in the mountain of rubble.

But with every finance company a front for a rainbow of fraud, and the value of other sectors buried under free money, what other game are you going to play?   Craps?

Palladin's picture

Well there's always NEWL....it's had 5 reverse splits in the last year, and the total dilution is 1,125,000, that's right, over a million.

http://finance.yahoo.com/q/hp?s=NEWL+Historical+Prices  Scroll back a few pages to October of 2013 and note the adjusted closing prices.

Take a look at the 52 week high of 247,500   http://finance.yahoo.com/q?s=NEWL

and note here that with all the reverse splits, the float is 2.89 million shares http://finance.yahoo.com/q/ks?s=NEWL+Key+Statistics

And today one hour into trading the stock has traded 7.6 million shares, and split adjusted that = 380 million shares in the first hour.

Cramer should be all over this one....


Notsobadwlad's picture

And their revenue comes from where? Advertising?


I can honestly say that I have never used any of these services/websites (maybe I looked at Bankrate once, but I do not clearly remember doing it)

When capital is worthless, why not apply it badly to pass it along to your parasitic cronies?!?

MrBoompi's picture

How can any company lose $650 million and stay in business? How could they have such a large market cap? Lack of revenue doesn't seem to be much of a concern, at least for now. How do I short stocks anyway?

localspaced's picture

Here's a fact that should tell you something...

Most of my friends hold media or tech jobs and are the kind of educated, trend-savvy people that you would expect to be all over these things. 

Fact is, they are not. In fact, people that do are looked at with disdain as attention whores. Writing a review on a page like yelp is seen as silly. Its a certain kind of people that do that, you know. 

The social bubble exists because there's an expectation that this is how people will communicate in the future. That leads to the piling in of money and people actually joining the service because they don't want to be left out and seem backward. Thats a great motivation! Not.

What they don't realise is that its ultimately boring. Nothing meaningful gets shared. In fact research shows that the best way to get unfriended on facebook is to bring up religion, politics or anything related to your own emotions. The online existence is very empty, shallow and meaningless. 

So once the new wears off, you move on to the next service. From facebook to whatever is next. Except my friends were already there in the message board days and witnessed the rise of the chat box and the advent of IM. By now..most of them are just done with being online. 

We are at peak social. Next bubble: apps.



p00k1e's picture

BBSs > Prodigy > AOL > Yahoo > MySpace  > Facebook >

Notsobadwlad's picture

Apps? IMO like many things apps can improve in quality, but there is already a bubble in app quantity.

IMO, apps are like books (that can be corrupted with negative consequences for the user) in that there can always be more, but very good ones are not that common.

Yes, I wonder sometimes about the people who are avid user Twitter and Facebook. They actually think what they do or say matters?

palmereldritch's picture

Well those P/L numbers look like something I regularly shovel out of my cat's litter box

Sathington Willougby's picture

If you don't know what the product is, it's you.

Bear's picture

Didn't mention the classic 4 billion market cap, 1 person company CYNK ... and by the way, what do 3,000 employees at Twitter do all day?

Hobo Sapien's picture

+100 for a recent Edward De Bono quote. His "The Mechanism of Mind" is a classic, sadly OP; the mass market paperback was going for $240 on Amazon last time I checked.

zerocash's picture

Time to resurrect Pets.com.