The daily deals site has verifiably tanked on Wall Street.Yikes, after Groupon reported its second-quarter revenues, the company's shares have nosedived in after-hours trading. As I write, the share price is down to $6.15, or 78 percent off from its IPO price of $28.
Of course, Groupon insiders have already cashed more than $800 million out of the company, so perhaps they aren't so worried about the company's current performance.
It is perhaps unfair, however, to group Groupon in with Zynga and Facebook. The business model looks a lot more like a traditional offline business, sort of like a yellow pages with a teensy-weensy bit of social added to the mix. The name of the game is selling thousands and thousands of local merchants on the idea that a breakeven or loss-leader promotion will lead to the long-term improvement of their businesses. That's always been a risky venture.
This article available online at: