I think that the essence of Groupon's value comes down to whether you believe that the $100 cost to acquire can in fact be consistently converted into the $300 at a rate that beats customer attrition, inflation, and interest rates.
Many of the stories in the media seem to indicate that businesses are getting burned by Groupon and that indicates that attrition is going to be a problem. Only Groupon themselves have a real idea of how large an impact this is having and how it will affect their business.
Early investors are cashing out pre-IPO which seems to indicate that insiders might have information that outsiders do not.
If I were a betting man I would bet that the insiders know that customer retention is an issue and the uncertainty is causing them to lock in more modest profits now instead of rolling the dice with everything post-IPO.
I agree that the valuation may be high, but their filing is no more problematic to me, than zynga's. Zynga failed to detail just how much of their revenue is coming from 1% of players who actually pay. They merely alluded to it as a risk factor, but I think is is a pretty important piece of information as a potential investor. I found filing Groupon's to be adequate. One bonus to a made up accounting metric is the SEC requires a GAAP reconciliation to be included, so you tend to get more details about the business than if the whole thing used GAAP numbers.
Many of the stories in the media seem to indicate that businesses are getting burned by Groupon and that indicates that attrition is going to be a problem. Only Groupon themselves have a real idea of how large an impact this is having and how it will affect their business.
Early investors are cashing out pre-IPO which seems to indicate that insiders might have information that outsiders do not.
If I were a betting man I would bet that the insiders know that customer retention is an issue and the uncertainty is causing them to lock in more modest profits now instead of rolling the dice with everything post-IPO.