Is it too late for Groupon?

Being a private company, the financial numbers rumored and said by Groupon have never been clear. Have they really made $800 million in revenue? What are the profits? It was back in December, 2010, when I read the news that Groupon rejected Google‘s buy offer at a reported $6 billion to instead have an IPO in 2011. I thought to myself, “Those guys MUST be crazy!” (or greedy!)

Fast forward a few months and in March, 2011, Groupons IPO valuation was said to be up to $25 billion. Craziness, if you ask me. A giant bubble.

When you really think about it, are there really any high barriers to entry for competitors of Groupon? There aren’t. Is Groupon’s business model easy to copy or improve? It is. Being in essence a discount site, I would even expect profit margins to be very low.

Today Groupon is now facing much more competition than it was a few short months ago. Facebook, Google, and even AT&T are now jumping in, and I expect them to take large portions of Groupon’s market share. Groupon is also facing heavy competition in planned expansions to China.

Still think Groupon’s IPO will still be worth $25 billion later this year?

Comments
2 Responses to “Is it too late for Groupon?”
  1. I still haven’t jumped the groupon band wagon, I don’t know something about them … I dont think they will be worth that much money much longer … do you use them?

    • Gian Sorreta says:

      I haven’t used them, but complaints are mounting about the size of the cut they take from clients. A big competitor, Living Social is starting to advertise much more, and I do see them making gains against Groupon, unless Groupon has something hidden that will somehow give them a competitive advantage (they don’t).

      $6 billion! $6 BILLION! How could they have passed that up?!?!?

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