Toronto Dude (torontodude) wrote,
Toronto Dude

Groupon says no thank you to Google

This is interesting. It is no surprise that Groupon was finally approached by someone. They have been the hottest startup of the year, and everyone is talking about them or trying to copy their business model.
Then Google comes with a rumored $5-6 b (with b!) offer on the table. Google is certainly known for finding value in startups, and Groupon is definitely a valued prize, but that valuation is really high, I mean it's only a coupon finder, their revenue is 2B but the margin is really low, it is no where close to the 6b being put on the table here.

Then comes the shocker, Groupon rejected the offer. !!! I am actually surprised. But there is talks that they will have initial public offering soon, so this number could be used as the bases for that. But personally speaking, I don't think they are worth not even half of that value. They have serious issues with the competitive market, many are copying their model, and even better, many are aggregating the deals with other websites, which can in the end dilute the value of Groupon's service. With declining this offer, they also declined a huge marketing channel, just imaging having groupon ads on the Google home page!

In the end I think they will be one of those multi-billion companies, but unless they change their model significantly, their prospects for further growth is fairly limited.
Tags: deals
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