Great comments on Groupon's IPO today - comparing it with a fertilizer company that had its IPO today as well. Who has the stronger fertilizer?
Groupon's IPO may have surged today, but like most other big tech IPOs, the chances of it staying at that price are slim.
Rentech Nitrogen Partners L.P., a nitrogen fertilizer company, also launched its IPO at today at $20 per share. It probably has a better chance at sustaining its model than Groupon and subsequent daily deal copycats ever will. Says The Wall Street Journal:
Rentech has a lot of alluring attributes. Its chief competitors' stocks are up 50% for 2011. It's riding a wave of positive cyclical attributes such as high product pricing and low feedstock costs. And it plans to pay out a dividend that could yield between 11% and 12% over its next fiscal year, based on the midpoint of its expected $19 to $21 price range, a great draw for income-starved investors.
Groupon's bling is fake. Says the New Yorker, eloquently:
Most big tech I.P.O.s surge and then drop. And, with its decreasing profit margins, fishy accounting, massive marketing expenses, floundering innovations, massive insider payouts, and surging competitors, Groupon is surely not worth thirteen billion dollars, or whatever its market cap is at this very moment.
If merchants start pulling out of the daily deals space because they're losing money on Groupons, the gold will start chipping away, revealing nothing but a cheap trick, a flimsy tin.
- ReadWrite
Application Voice (AV) headquartered in Clearwater, FL USA is a technology company with an emphasis on telecommunications, voice, and data. AV has a focus on open source and cloud computing based solutions. Peter Weyant, President & CEO of AV contributes to this blog along with other AV staff.
