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I did just fine on my long positions today.... I only buy crazy overextended stuff. FYI, Groupon will actually do well when things get really tight. It will far less people intensive in the future once the vendor relations are all established and people are trained on creating offers/campaigns. It is now making money on the transactions and has about 40MM customers. Half of its market cap is now cash... Plus, I only bought 5K shares.
I'm net short in a massive way. But, I'm always both long and short (based upon what is overextended in each direction) just in case. And, I'm playing for the longer time horizon with GRPN. If they were willing to sell to Google, I suspect Google would still buy them at a significant premium to the current stock price. They are onto something much more significant and distinctive than AMZN... Amazon realizes it too, which is why it invested in Living Social (but GRPN is light years better)...
Happy to lose short term. I will win long term.
Tech, while they have $1.3B in short and long-term cash, they have more than $1.1B in current liabilities (vs only $98M in receivables). That is a net of $300M in cash ($1.3B-$1.1B+$0.1B). Not a good situation for them considering their other issues.
$300MM in cash with no debt in a business where most of the cost is people and can be scaled down easily is not a bad situation. It has TTM FCF of about $300MM, so it could easily lever up a little and service said debt.
Groupon, like Amazon, has a negative working capital model. They collect up front and disburse later. They are also now integrating and capturing value from the payment platform.
Again, comparing GRPN to AMZN, they have about the same net current assets (Amazon has about $11B in cash and ST assets and about $11B in ST liabilities). It has locked in a higher cost structure that DOESN'T scale down well... I just thought it was illustrative.
In terms of Groupon, I live in the Chicago area. I'm willing to support a company I want to see succeed, even if that means I am taking a little more risk than others feel comfortable with.
Sybs, I DO NOT CARE THAT IT IS TOO EARLY. I will make so much from the downstroke that this is inconsequential. I've carefully designed my portfolio to include company levered to increasing financial stress and the probable responses. The companies I am long will do well in that environment. All that "money" will in fact move somewhere. I happen to be staking out the places where it will move...
"Tech, while they have $1.3B in short and long-term cash, they have more than $1.1B in current liabilities (vs only $98M in receivables). That is a net of $300M in cash ($1.3B-$1.1B+$0.1B). Not a good situation for them considering their other issues."
Good - someone that talks 'tech' with the flipside... The dumbars insists on buying stox prior to hge s&p dumping 800 points.... Tech - DONT BUY STOX YOU FVCKIN IDIOT - ITS MUCH TOO SOON!!!!
I'm always too early. That's my lot in life. I outline the short thesis on these message boards and fight scams like AMZN while they are still on the way up and someone like Einhorn comes in just as it is about to break (essentially articulating the same thesis). My timing sucks. I'm not a trader. I'm an investor, so I have to risk being a little early because I never chase. Ever. I only buy stocks that are massively undervalued (or overvalued) from a fundamental or strategic perspective. In the case of GRPN, it is the strategic one that matters. GRPN more uniquely positioned to address a bigger market opportunity than AMZN. If I lose $16K so be it. I will double up if it makes it to $2.50 and double up again at $2.
Sybil, the general market direction will be down. But, there will also be a very significant internal rebalancing. Ironically, almost everyone is wrong-footed on the latter. I will capitalize by owning companies that are on the right side of that rebalancing, even if/as they take a hit first...