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To: Glenn Petersen who wrote (214)1/3/2012 3:38:31 PM
From: stockman_scott
1 Recommendation   of 462
Groupon Shares Fall on Merchant Concerns

January 3rd, 2012 - (Reuters) - Groupon Inc shares fell more than 7 percent on Tuesday on concern the company may not have as many daily deals to offer as some merchants pull back. Susquehanna Financial Group and daily deal industry tracking firm Yipit surveyed almost 400 merchants recently about their experiences running daily deals with Groupon, LivingSocial and other providers.

An average of 8 out of 10 merchants enjoyed working with daily deal companies, the survey found.

However, it also found that 52 percent of the surveyed merchants are currently not planning to feature deals in the next six months. Nearly 24 percent of the merchants intend to feature only one deal in the next six months, the poll also found.

Groupon shares were down 7.4 percent at $19.10 during afternoon trading on Tuesday, below the company’s initial public offering price of $20.

Last year, Groupon completed one of the largest Internet IPOs since Google’s debut, but the Chicago-based company’s business model has been questioned by some analysts.

A crucial part of the company’s business involves persuading merchants to run deals and accept the large discounts that are integral to the offers.

“Our proprietary merchant survey highlights concerns of the daily deal sites and early read implies lower usage over the next six months, despite some surprisingly high satisfaction rates,” Herman Leung, an analyst at Susquehanna, wrote in a research note detailing the survey results.

Groupon and LivingSocial recently unveiled instant deals, which are location-based offers that are usually run by merchants for a few hours only.

The survey by Susquehanna and Yipit found that only 10 percent of merchants polled have considered running an instant deal with Groupon or LivingSocial.

(Reporting by Alistair Barr, editing by Dave Zimmerman)

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To: stockman_scott who wrote (216)1/12/2012 3:35:29 PM
From: Glenn Petersen
1 Recommendation   of 462
Andrew Mason will be on "60 Minutes" this week:

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To: stockman_scott who wrote (216)1/25/2012 4:23:04 PM
From: Glenn Petersen
1 Recommendation   of 462
Potential competition from an unlikely source:

Bank of America Looks To Enter Daily Deal World By David Benoit

Wall Street Journal
January 25, 2012, 3:26 PM
Look out Groupon, Bank of America wants to be the latest daily-deal company.

The bank is going to be testing a service with employees that offers what amount to coupons to holders of BofA credit and debit cards, colleague Andrew R. Johnson reports.

This is one attempt by giant banks to tap into the piles of data they have on their customers and turn it into a revenue stream. BofA would target the deals by mining what a customer typically purchases. The discount from the deal, if used, would show up as cash-back on the customer’s card at the end of the month.

That kind of targeting could give the bank a big advantage from mass-email lists of deals like Groupon.

But it remains to be seen if the BankAmeriDeals program, which is what they’ve decided to dub this, will be viewed positively by customers who still seem angry about the $5 fee the bank planned to charge them for using debit cards, even though the charge was never implemented.

There’s no word if one of the deals would be for a $5 refund on bank fees.

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To: stockman_scott who wrote (216)1/27/2012 11:44:58 AM
From: Glenn Petersen
1 Recommendation   of 462
A two horse race:

LivingSocial Now At 5,000 Employees, Half The Size Of Groupon

Erick Schonfeld
January 27, 2012

A few days ago, at the DLD conference, Groupon CEO Andrew Mason revealed that his three-year-old daily deal company now has 10,000 employees, with about 70 percent overseas. What about LivingSocial, the No. 2 daily deal company? Tim O’Shaughnessy told me yesterday the company is now at 5,000 employees worldwide, with “just under half” in the U.S.

While he won’t reveal LivingSocial’s revenues (the company is still private, and just raised another $176 million in December), he says: “We’ve grown very significantly in the last 12 months. We entered 2011 with 3 countries,, now we are at more than 20, with 60 million members worldwide, and just around 5,000 employees worldwide. We have been able to aggressively grow the business.”

But what about all of the Groupon and LivingSocial clones dropping like flies? Is the daily deal business winners-take-all, with Groupon and LivingSocial emerging victorious, or is the whole industry in trouble? One recent study, estimates that 798 daily deal clones hit the deadpool in the last 6 months alone. ”A lot of people started to scale and started to realize they didn’t have all the pieces needed to make it work,” says O’Shaughnessy.

The bigger question is whether the whole industry’s moment in the sun has passed. After all, the daily deal business was born in the worst recession since the Great Depression when deals were especially appealing. Now there is deal fatigue, and the economy isn’t in as dire straights. O’Shaughnessy doesn’t see it that way. “The business is not predicated on being in a recessionary cycle,” he argues, pointing to its success in countries like Brazil whose economies are doing well.

Okay, but what about the fact that traffic to LivingSocial has dropped significantly since last summer? In the daily deals business, historically, at least, there was a strong correlation between traffic and transactions. According to comScore, visitors to LivingSocial’s site peaked last June at 11.2 million worldwide. In December it was down to 4.4 million. Groupon also took a hit, peaking at 14.4 million worldwide unique visitors in June, but it’s been growing steadily since September and was back up to 12.5 million uniques in December. (See chart above).

There is another factor to consider here, however. “Everybody knows,” says O’Shaughnessy, “a lot of marketing has gone into this space. Guess what? When you click on an ad and you are taken to a page, that is traffic. Once you get enough users, if you stop doing some of that marketing, you will have a significant drop in traffic.” The daily deal companies were paying through the nose for traffic. It certainly showed up in Groupon’s numbers. And LivingSocial was doing the same thing. We’ll find out when Groupon announces its first earnings quarter, how much it is continuing to spend on marketing, but LivingSocial has pared back and is now focussed on harvesting the 60 million users it already has a relationship with. Also, these numbers don’t measure mobile, which is “an incredibly meaningful percentage of interaction,” notes O’Shaughnessy.

The one thing I took away from my conversation with him is that you can’t be too simplistic in your analysis of these businesses. Not every customer is the same either. the 60 millionth customer does not behave the same way as the 1 millionth, and mobile app users are much more engaged. It is important to look at cohorts of customers (people who joined a year ago versus 6 months ago), and see if older customers are becoming more loyal.

Most importantly, he sees the daily deal business as we know it today merely as an entry point for local commerce. It is version 1.0, and he is already building version 2.0, which could make LivingSocial end up looking significantly different from Groupon down the road. I will delve deeper into where LivingSocial might be headed in another post.

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To: stockman_scott who wrote (216)2/1/2012 7:25:59 PM
From: Glenn Petersen
2 Recommendations   of 462
Amazon filing shows $558M loss for LivingSocial in 2011

by Todd Bishop
February 1, 2012 at 8:31 am

How much does it cost to bulk up and compete with the likes of Groupon in the daily deals market?’s annual Form 10-K filing, made public this morning, reveals detailed financial information about LivingSocial, the privately-held Washington, D.C.-based company in which Amazon is an investor.
A footnote in Amazon’s filing gives this condensed statement of operations for LivingSocial in 2011.

  • Revenue: $245 million
  • Operating expense: $686 million
  • Other expense: $117 million
  • Net Loss: $558 million
We were able to track down some additional context: A person familiar with LivingSocial says the revenue would have been significantly higher had it included the company’s full international results for the year, which were boosted in part by a series of overseas acquisitions. In addition, the bottom line was impacted by heavy marketing expenses, as the company sought to grab market share, and those expenses were concentrated heavily at the beginning of last year.

The losses also reflect non-cash items such as stock compensation for employees, as the company grew from 600 employees to 5,000 over the course of the year, and expanded from three international markets to 20. Here’s the Living Social balance sheet as of Dec. 31, as shown in the Amazon filing.

  • Current assets: $156 million
  • Noncurrent assets: $285 million
  • Current liabilities: $225 million
  • Noncurrent liabilities: $21 million
  • Mandatorily redeemable stock: $199 million
Amazon, which originally invested $175 million in LivingSocial in 2010, says the book value of its 31 percent interest in the company was $208 million as of Dec. 31. That was up from a $192 million book value as of Sept. 30, when Amazon put its stake at 32 percent.

Amazon was reportedly among the investors in a follow-on financing round in LivingSocial in December, allowing the daily deals company to hold off on an IPO for the time being.

Groupon, which went public last year, also continues to operate in the red.

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To: stockman_scott who wrote (216)2/7/2012 2:47:56 PM
From: Glenn Petersen
1 Recommendation   of 462
GRPN reports tomorrow. A preview:

Groupon’s Made-Up Holiday to Play Role in First Earnings Report

By David Benoit
W3all Street Journal
February 7, 2012, 1:52 PM

Groupon, one of last year’s most-talked about IPOs, will deliver its first earnings report tomorrow.

The daily-deals company is expected to report a 3 cent per share profit on revenue of $475 million, according to Thomson Reuters. (It is the first time the company has released the data at the end of the quarter, though it did disclose financial data in its pre-IPO filings.)

The stock rallied 15% this year to $23.78 recently, but remains below its highs of over $31 the day it priced, amid concerns about dramatically increased competition.

Here’s what else analysts say to look out for tomorrow.

Citi examines surge in gross billings: Citi analysts predict $1.31 billion in gross billings, tripled the prior year, but slowed dramatically from the quintupling Groupon had been experiencing. Showing the same growth patterns (massive by all accounts except Groupon’s own high bar), Citi believes active customers are Groupon are likely at 31 million, 3.5 times where they were a year earlier.

Raymond James will look for any signs of customer fatigue: Given the slowing growth rates, it matters more if Groupon’s customers are actually buying any Groupons. Raymond James says investors will be focused on consumer engagement metrics, including Groupons sold per active customer.

Morgan Stanley expecting a beat on Groupon’s made up holiday: Morgan Stanley believes Groupon can beat sales expectations, partly thanks to “Grouponicus,” Groupon’s somewhat creepy and made-up commercial holiday that it bases on a legend of Groupo the Deal Bird who travels throughout history bestowing deals upon the people. Outside of that, Morgan Stanley is looking for clarity on what exacting Groupon will report each quarter.

Susquehanna focuses on commissions: The analysts will be watching how much of each sale Groupon is collecting –the take rate. They are also expecting a first-quarter outlook for better top and bottom lines.

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To: stockman_scott who wrote (215)2/8/2012 5:46:03 PM
From: Glenn Petersen
1 Recommendation   of 462
GRPN disappoints.

The press release:

Groupon Posts Quarterly Loss

New York Times
February 8, 2012, 5:00 pm

narrowed its fourth-quarter loss to $9.8 million on an adjusted basis, as the online coupon giant sought to demonstrate its continued growth in its first earnings release as a public company.

The loss, which amounts to 2 cents a share, is down sharply from the $185 million loss for the quarter a year ago. The company cited an unusually high tax rate for some of its overseas operations.

The pro-forma figures exclude certain accounting charges, like stock-based compensation. On a generally accepted accounting principles basis, Groupon lost $42.7 million for the quarter.

In other metrics, however, Groupon showed some improvement. Its revenue for the quarter leaped to $506.5 million, up 194 percent from the same time a year ago. The average analyst estimate for quarterly revenues was $475 million, according to Thomson Reuters.

The company also said that it turned an operating profit, of $15 million, for the first time in nearly two years.

From the time Groupon first sought to go public, its story has been built on enormous growth, as it raced to acquire a daunting customer base. The company now claims 33 million active users — those who have purchased at least one deal over the past year — worldwide, up more than 20 percent.

Yet its revenue guidance for the first quarter of this year is highly conservative, expecting just $510 million to $550 million. And while the company has continued to trim its marketing expenses over the past year, to $256,000, its non-marketing costs climbed to $247.4 million.

“This quarter’s results show that our model is just starting to demonstrate leverage – and that Groupon is the clear leader in our space.” said Jason Child, Groupon’s chief financial officer.

Groupon shares fell 6 percent in after-hours trading, to $23.10.

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To: Glenn Petersen who wrote (222)2/8/2012 6:23:39 PM
From: Sri.1729
1 Recommendation   of 462
Now trading at $20.65. On a personal note, I believe, we will have to wait and watch before we conclude a valuation for GRPN. A $15-$17 is in my opinion a good valuation at the moment. What are your thoughts?


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To: Sri.1729 who wrote (223)2/9/2012 1:37:43 PM
From: Glenn Petersen
   of 462
Your valuation is reasonable. The stock should probably be trading in the low teens until they achieve profitability. It will be interesting to see what happens when the lockups expire.

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To: stockman_scott who wrote (216)2/17/2012 7:18:02 PM
From: Glenn Petersen
1 Recommendation   of 462
GRPN makes a strategic acquisition:

Groupon Acquires NYC-Based Startup Hyperpublic

Jason Kincaid
February 16, 2012

Groupon has just acquired Hyperpublic, a NYC-based startup that’s spent the last two years building technology related to geo-location and the layers of information — like deals and events — that live on top of it.

Terms of the deal are not being disclosed, but CEO Jordan Cooper describes it as a “huge win for our team and our investors”. He adds that Groupon was after Hyperpublic’s technology — this isn’t a case of it acquiring the team alone.

Cooper, who is also a General Partner at Lerer Ventures, says that a portion of Hyperpublic’s team will be moving out to Groupon’s engineering offices in California, while others will be leaving the company to pursue other ventures post-acquisition. Cooper will continue in his role at Lerer, and he’ll also be assuming a role with Groupon (he says he can’t get into specifics, but that he’ll be spending a lot of time in California as well).

The startup’s developer platform is going to be shut down, with maintenance and support continuing through March 2 2012 — all data will be deleted after that. Developers can find a FAQ on transitioning their data here.

The startup was founded in 2010 by Cooper and Doug Petkanics, who leads the company’s engineering team and helped forge what Cooper describes as a very engineering-focused environment. Hyperpublic raised $1.5 million in 2010 — Cooper says that board members Jordan Levy (Softbank Capital) Ken Lerer (Lerer Ventures) were also instrumental in the company’s development.

Finally, Cooper points out that Hyperpublic — which has more APIs than it does user-facing services — is a decidedly tech-heavy company. Which breaks with the stereotype of NYC startups being more focused on social platforms and media than on building ‘hard’ technology (incidentally, I suspect this stereotype will fade in the next year or so as the NYC tech community continues to grow).

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