According to AllThingsD.com, Google is in negotiations to buy Groupon.com and is offering “well above what Yahoo offered earlier this year for the company”.
Yahoo according to AllThingsD, Groupon “turned down a bid from Yahoo in the $2Billion – $3 Billion dollar range earlier this year”.
“Groupon, whose revenues are reportedly upward of $50 million a month”
Other possibly buyers for the company according to the story are Microsoft, Amazon eBay, and Facebook
Groupon.com was just started less than 2 years ago.
Now just a few months later the valuation seems to be north of $3 Billion.
many sources report this rumor
I think that Groupon will be sold but I’m not sure that Google wins the race
other big companies may want to buy it… Amazon, eBay, etc.
Should be interesting.
Amazing how quickly a company can go from $0 to $4 Billion in valuation.
They did all the right things MHB: hooked up with the right VC /people, flooded google with Groupon ads, media exposure and now unload it to a sucker (There’s no way it’s really worth that much)
Google invests very much also in many “off-line” business like solar energy, smartphone, etc.
the off-line-commerce is only the “next step” in the Google’s strategy
The site and the idea that something like that is worth billions to someone makes me sick, but it’s good news for all us tech guys, it looks like we’re headed for another tech bubble. Cash it in while you can..
For $3-$4 BILLION Dollars?
…
For $3-$4 BILLION Google Dollars?
It’s time to dump, the offers are for worse and worse businesses every day and many people are getting into the daily coupon game. They have been good for epc if one has restaurant sites though 🙂
It’s hard to argue with $50m / month, but long term i think this is a tough model. Businesses don’t make much money (if any) and consumers will get sick of it. you can only buy so many spa gift certificates that you never use.
Gordon: I completely agree. The business seems very, very faddish. Maybe there’s just a ton of markets they have yet to hit so there might be growth, or whatever, but the model itself just doesn’t seem like something that will be going strong in 10 years, after the novelty wears off. I mean, eBay is part of the internet-furniture and has struggled with the same thing- a company like Groupon, I don’t know… Maybe I’m just missing it.
As an aside, my bestest-buddy works for them here in Chicago and really seems to like his job…
That’s good news!
Really, if a company like Groupon is valued at $4B, I have more hopes to set a company valued at 1/4 of that (and sell to another sucker as somebody mentioned above).
It is making $50m per month but will that last for 8 years (in internet era that’s an eternity) to get back the money spent on that????
I see copies flocking every day and some of them are quite good. That market has already more competitors than in the beers market
I will never understand why people use Revenue to drive valuation instead of EBITDA or Net Income.
How long will it take the buyer to make $4B in profit? 50 years? 100 years?
A company with 2 years under their belt and people are going to offer a P/E ratio of something in the thousands. Absolutely insane.
TLD- Buying companies like this- at return multiples like this- seems to be a distinct phenomenon of very shortsighted tech companies with a ton of free cash and no idea ‘what to do next…’
What totally fascinated me about the web space was its configural possibilities; the ability to develop and maintain what was effectively a ‘holding company’ – using pooled resources- while managing multiple business streams. People are so concerned about finding better ways to make bigger nickles via parking, splogging, etc- instead of developing new-era business processes that really harness the lightweight operating capabilities of eBusiness… anyway, I digress.
It seems that the creative, forward-thinking people who are able to develop an operation that really ‘takes’ on the web completely suck at capital management. The smart ones- Bill Gates- cozy up to Warren Buffet and get learnt’ that way. The dumb ones- possibly, G- spend billions of precious capital to cannibalize upstart tech companies without a proven, durable consumer sentiment? It just seems like a terrible way to handle precious cash that DOES NOT flow freely forever, yet when the champagne is being uncorked, everyone thinks it always will.
“Businesses don’t make much money (if any) and consumers will get sick of it. you can only buy so many spa gift certificates that you never use.”
Gordon,
That’s a bit contradictory.
If nobody uses their spa gift certificates, it’s 100% profit for businesses. IMO, the “breakage” is significant so businesses do make money, and when a consumer sees and buys the “deal,”they are getting utility/satisfaction from the purchase and will buy again even if they don’t use it.