Comments on: Groupon Is Worth More Than $2.5 Billion

By: rhien

rhien — Tue, 30 Nov 2010 14:17:52 +0000

yes, that’s true. It is impossible Groupon value only in the $ 2.5 billion in revenue each month should Groupon value more than $ 2.5 billion

By: Myles Younger

Myles Younger — Mon, 29 Nov 2010 21:01:22 +0000

I like your auction theory, John.
Now playing the cynic: I don’t see a lot of added economic value in Groupon’s business model, plus it can be very easily replicated (as pointed out by Uwe). Sure, there’s a little value added in the way Groupon aggregates and efficiently distributes coupons to consumers (keeping in mind they send me 2 emails every frikkin’ day…seems like they are on the road to burning out their user base). However, businesses can’t ALL slash their prices ALL the time, and insane deals are what attracts consumers to Groupon and keeps them coming back. Without the insane discounts, Groupon suddenly becomes pretty boring. It’s a classic law of retail: you can’t put everything on sale all the time; not only does that erode (or eliminate) profit margins, it erodes the perceived value of the products/services. Coupons are an age-old marketing tactic, and they’re definitely going to move online like so many other commercial tactics, but Groupon hasn’t revolutionized commerce to the tune of a $2.5 billion valuation. The ridiculously deep discounts that Groupon promotes simply aren’t sustainable over the long run. Lastly, I don’t care about $50 mil reported revenue…what’s their cash flow look like?

Myles Younger
Co-founder, http://www.cannedbanners.com

By: Uwe Hook

Uwe Hook — Mon, 29 Nov 2010 15:33:55 +0000

Don't agree. Groupon is worth much less. Their business model can easily be replicated and their merchants are most often than not unhappy customers. I wrote on my blog about it

http://is.gd/hXcOA

By: Craig Rachel

Craig Rachel — Mon, 29 Nov 2010 13:59:34 +0000

Its impossible to value Groupon one way or another knowing just the monthly revenue.

By: John

John — Mon, 29 Nov 2010 13:07:29 +0000

@Sidharth yes, sorry, I corrected that – I transposed.
I stand by the word “mere” given how strategic this buy would be, and how reasonable such a multiple is, especially compared to similar multiples for, say, YouTube or DoubleClick, which were way higher.

By: Sidharth

Sidharth — Mon, 29 Nov 2010 13:03:12 +0000

John , 50million x 12 months = 600 million . Rumored Sale Price : 2.5 billion. It is almost 4.2 times the run rate. Not too bad for a business that does not have any secret sauce except for the first mover advantage. It would be justified.

By: Assumptions

Assumptions — Mon, 29 Nov 2010 12:58:13 +0000

This assumes that their self-reported revenue numbers are accurate. Talk to small business owners who’ve used them.