http://www.betabeat.com/2011/06/03/groupons-business-is-decaying-in-its-established-markets/
> Groupon’s costs to acquire customers is skyrocketing, while its revenue per customer is plummeting. Along with shrinking margins and a lower number of Groupon’s sold per deal, Yipit sees serious warning signs in the company’s financials.
http://shortlogic.tumblr.com/post/6142108636
> Groupon has filed its S-1 and hopes to raise $750M in its initial public offering. Given they’re currently losing a staggering $117M per quarter, despite revenues of $644M, they’ll be burning through that cash almost as soon as it hits their account.
>
> At the moment, it’s costing them $1.43 to make $1, and it doesn’t look like it’s getting any cheaper. They’re already projected to make close to three billion dollars in revenues this year. If you can’t figure out how to make money on three billion in revenue, when exactly will the profit magic be found? Ten billion? Fifty billion?
And on the Ponzi angle:
> With cash on fire like this, they surely need more. They recently took nearly a billion dollars from investors, but hardly any of it went into the business. Instead, the bulk was used to cash out insiders and early investors. What they’re left with is roughly $208M in cash on hand, which is less than two quarters worth of operating capital at the current burn rate.
>
> The venture capitalists who jumped on board in January with a cool $950M in series G funding were obviously not going to repeat the deed. They’re merely in line to turn a quick buck in the forthcoming IPO pop. Imagine the dialogue: “Okay, here’s a billion dollars, but we fucking want it back this year — a couple times over!”
>
> Since they saw the numbers on the business in January, they surely knew that Groupon was going to need a truckload more cash and soon. And since the round was already a who’s who from Sandhill Road (Greylock Partners, Kleiner Perkins, Andreessen Horowitz), the next step was naturally to dump it on the public.
And finally the usual dreary truth:
> Morgan Stanley, Credit Suisse, and Goldman Sachs are putting their good names [sic] behind the Groupon deal and will sell into the all-but-assured bull-opening run. The people who will end up assuming all the extraordinary risk are the pension funds and regular schmucks now eyeing another chance to get in on the ground floor of another bubble.
—ravi