terrylee

Groupon, the originator of online group discount websites, soared in the stock markets on Friday after being initially offered to the public for $20 on Thursday.  By the time the markets closed on Friday evening, shares of Groupon were selling for $27.19, an astounding 36% above the initial price.  At this current value of $27.19, the company is valued at more than $17 billion, a seemingly ridiculous value, considering the recent problems that Groupon had with accounting, and the fact that, after the accounting adjustments, the company did not actually seem profitable.  Yes, Groupon does have potential to grow, with more and more bargain hunters emerging everyday in the turbulent economy, and it has the advantage of being the first to tap into the target market, establishing its brand position; however, how long can they hold that position?  Some of the biggest names in the internet industry, such as Google, are emerging as competitors with the launch of such projects as Google Offers.  Google, a company with massive capital and brand recognition, could emerge as a threatening competitor in the future.  Because of such negative factors as lack of profit and risk of competitors, it seems that the rise of the stock was mostly due to hype, and is a growing bubble, that is soon to pop.