2011: WTF?

GRPN vs. BDNK (Or: The Battle Between My Fat, Pale Jewish Ass and Groupon)

Everything you should understand about Tech IPO's going into 2012 fittingly involves our pale, large ass and the effort we put into decreasing it.

screen shot 2010 12 11 at 3 09 56 am e1325271719141 GRPN vs. BDNK (Or: The Battle Between My Fat, Pale Jewish Ass and Groupon)

So, we at Betabeat have been waiting to roll this one out for a while. Seeing as how the business year is coming to a close today—and also, like, nobody’s around to read what you’re about to read—there’s no time quite like the present to disclose the following:

My fat, white Jewish ass has been engaged in a battle with Groupon for about three months now.

THE LEAD-UP

June 2, 2011: Groupon plans to take their company public by putting themselves on NASDAQ in what’s commonly known as an I.P.O. or “initial public offering.” The company is valued at $30 billion. It’s a controversial I.P.O. for a number of reasons. To name a few? It’s a company that has nearly limitless hype, a CEO who can’t keep his mouth shut, a self-administered transparency about their lack of transparency, an oddly hypnotic mascot, a bunch of investment banks salivating over the prospect of running the company’s I.P.O. (as investment banks salivating over anything is inherently worrisome), and a shit-ton of red flags often drowned out by bullish hype. We may have some complicated feelings about it.

November 2, 2011: Our complicated feelings manifest themselves in an infographic that took three hours too long to make.

November 3, 2011: Groupon prices their IPO at $20. We may have some pessimistic feelings about how well this will go.

November 4, 2011: GRPN shares open on the first day of trading at $26.11, up 30.5% from their original I.P.O. price. Four days later, Dealbook’s Evelyn M. Rusli writes about the “windfall” investment banks made on Groupon. A week after trading on NASDAQ, and Groupon is at $24.25, still up 21 percent from their original I.P.O. pricing.

THE BET

So, we’re now at the point where some of us have spent far more time considering Groupon than the average, healthy person should. Groupon has just started their sixth day on NASDAQ. It’s a Monday afternoon. I am still pessimistic about GRPN, which is still “up.” And as it want to happen at this point, GRPN gets discussed in the Betabeat Skype room.

In this particular discussion, I propose that my fat, Jewish ass is a better investment than GRPN:

 

tumblr luntk3qbhq1qz6euco1 1280 GRPN vs. BDNK (Or: The Battle Between My Fat, Pale Jewish Ass and Groupon)

It’s a fair bet.

groupon cat 360 GRPN vs. BDNK (Or: The Battle Between My Fat, Pale Jewish Ass and Groupon)The Market Forces Working For and Against Groupon ($GRPN):

+ Groupon is the Coca Cola of social coupon deals. Everyone knows it.
+ Investing in Groupon to the general public sounds like investing in Coca Cola: Not a stupid bet, especially since all of your friends are using it. The hype is extraordinary.
+ Startups are everywhere! People love ‘em! And even if they turn out to suck or outgrow themselves, people don’t have schadenfreude about startups the way they do when other corporations fail.
+ It’s a startup-turned-billion-dollar-I.P.O. toured by investment banks, which is like having your garage band’s first major tour produced by Disney, Harvey Weinstein, and Jerry Weintraub with tickets sold by Ticketmaster and Budweiser sponsoring the whole thing. The banks put their own money and their clients’ money into the I.P.O. because they need to put their money where their mouths are when they’re selling Groupon to the world. It’s like having every awesome Arnold Schwarzenegger chracter ever as their personal I.P.O. trainer.
- People think it’s a Ponzi scheme.
- Groupon CEO Andrew Mason can’t STFU.
- We’ve seen a tech bubble once before, and it’s ugly.
- GRPN started out strong in their market debut, but after five days, has tumbled from 30.5 percent above the debut price to 21 percent above the debut price.

38192 642566739513 57200952 36024227 288061 n GRPN vs. BDNK (Or: The Battle Between My Fat, Pale Jewish Ass and Groupon)The Market Forces Working For and Against My Fat, Pale Jewish Ass ($BDNK):

- Bacon. Cheeseburgers. Bacon Cheeseburgers.
- There’s a Shake Shack literally on the same block as this office.
- I work in Midtown, where eating healthily is less of a dietary issue so much as it is an existential riddle.
- I’ve smoked about four to seven cigarettes a day since I was 16.
- December holidays were in a month. There was a lot of eating to be done, and holiday parties to hit. And I enjoy the occasional alcoholic beverage.
- I’m not actually wagering anything.
- Despite going to the gym semi-regularly, I’ve weighed within the same five pound range of 198-203 basically forever. I also don’t have a trainer or anyone telling me how to do this.
- Who joins an overpriced gym when they don’t even know how to use it? Assholes, that’s who. And I’ve been a member for two years.
+ I really want to get into shape. Who doesn’t?
+ My gym is ridiculously expensive, and it’s cheaper the more I go, and I don’t want to just let that money waste away, especially since I’m locked into a contract.
+ Nothing tastes as good as skinny feels (supposedly).
+ I was, that day, newly single. Not, like, on-the-market-newly-single, but single-enough-to-want-to-go-to-the-gym-more-than-I-did-a-week-prior. Also, I had been decent—not great, but good enough—about going to the gym regularly prior to this. I guess if you weren’t me and knew this, this would kind of be like insider trading on my ass, but thankfully, $BDNK isn’t subject to SEC regulatory law. Also, nobody was actually wagering anything on this. So there’s that.

So, the bet was on. Any weight I’d lost from that point on would be counted up as an increase on the share price of $BDNK versus the share price of $GRPN. So confident was I in the forces of investment banks working overtime to create a cloud of bullshit around Groupon, or the overly euphoric tech press’ and general investment sector’s respective lack of abilities to see through the bullshit that Groupon going public is—like all financial euphoria—that I thought my ass could beat it.

Two months later, and here we are.

THE RESULTS

$GRPN:

 

grpn tracking e1325267540144 GRPN vs. BDNK (Or: The Battle Between My Fat, Pale Jewish Ass and Groupon)

It’s like they knew. The day after this started, $GRPN spiked back up nearly $2, but plummeted shortly after Thanksgiving (a particularly treacherous stretch for $BDNK as well). After that, $GRPN inched its way back up to $24, before yo-yoing back down to shortly above $20, where we are today.

$BDNK:

[Here it’s worth noting that the way we can all tell I’m not lying is because my ridiculously overpriced gym has this scale thing where I log in with my thick, sausage-like fingerprint—yes, actually my fingerprint—and it uploads the results onto their website. Technology!]

 

bdnk nov GRPN vs. BDNK (Or: The Battle Between My Fat, Pale Jewish Ass and Groupon)

The day the bet started I weighed in at 197.8. After Thanksgiving, it was back up to 199.6. This was not looking good for BDNK. Then December started: After a drop down to 194, it was back up to 197.4. A trip to Vegas, a trip to Miami, an extraordinary craving for Cuban sandwiches (especially for a Jew), a bunch of holiday parties, and a chest infection did not help matters. And yet, in the end, for their patience with market forces and confidence in their investment, $BDNK’s investors saw steady ass reduction (or: growth in BDNK’s market value).

 

bdnk dec1 GRPN vs. BDNK (Or: The Battle Between My Fat, Pale Jewish Ass and Groupon)

With $BDNK results inverted to look like gains, the two charts for the last three months, side by side:

 

inverted bdnk chart e1325269219643 GRPN vs. BDNK (Or: The Battle Between My Fat, Pale Jewish Ass and Groupon)

and

 

grpn final GRPN vs. BDNK (Or: The Battle Between My Fat, Pale Jewish Ass and Groupon)

And there you have it.

Over the betting period, $GRPN saw a decrease in share price of 15.629%.
Over the betting period, $BDNK saw a decrease in mass (and thus, increase in share price) of 2.427 percent.

Unfortunately, I’m also not gaining any lean mass or really doing much for that whole “body fat” thing, which basically means I’m burning through my fat and into my muscle, which, if I continue on this route, will make me small and flabby instead of large and flabby. Which is really weird. I’ll look like that alien from American Dad. I should probably invest in a trainer.

THE PART WHERE WE WRAP THIS ALL UP IN A NICE, NEAT AND WORRISOME PACKAGE

Well, first off, I should probably do something other than run on a treadmill to Katy Perry for an hour and dry heaving in a gross pile of sweat for the following fifteen minutes. Probably not the best fitness routine. But really, that euphoria regarding tech investment (or any kind of investment) is usually a dangerous situation made worse by the few people who can win against the bunch of people who lose, among whom are the entire startup sector (which we like!) and general investing public (which we also like).

In the same way logic should dictate that you would never give a mortgage to someone who can’t pay it off, logic should dictate that the “market forces” of nature would have spanked everyone enough already to ward off continuing superfluous tech and startup I.P.O. hype in the face of all these other failures.

But we don’t live in a normal world where logic dictates the way things happen.

Instead, investment banks helped create a demand for housing loans to fail, just as investment banks help hype up and then shepherd startups and tech companies through the I.P.O. process just long enough to make a quick buck on them, shortly before feeding them to the starving Sarlacc Pit that have become what are now regular “market forces” to be devoured.

2011 was a great year for America’s technology sector. Say what you will about Steve Jobs, the man helped push forward America’s reputation for the kind of innovation that makes the world better, through product, through economic stimulation, and through the technological advancement of our society at-large. Plenty of other companies and startups did, too, and they’re poised to continue doing so through 2012, in an era when this country needs to cultivate great innovators to succeed on a long-term scale. Unfortunately, great innovators—like everyone else—are subject to greed, the bewilderment that prospects of unmitigated wealth entail, and the bad habit of believing one’s own bullshit.

Let’s hope 2012 has less of that. As the dumb, folksy idiom goes: ‘Hope for the best, prepare for the worst.’

But given recent headlines…

Robust 2012 Tech IPO Scene Is Likely [CFO World]
Banks Face Off For Facebook IPO [WSJ]
Facebook Poised to Lead Biggest U.S. Internet IPO Year Since ’99 [Businessweek]

…the ‘best’ doesn’t really seem all that likely.

fkamer@observer.com | @weareyourfek

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Comments

  1. Hunter Peress says:

    Groupon is a company built around a solid business model, it is fundamentally a company that helps average people save money. This is a much more solid business model than linked in. 

  2. I would like to comment about the zynga public offering . New issues are almost always bad investments the vast majority of these stocks are way over priced on purpose. I always recommend that investors stay away from these stocks.