So the news came down that Groupon Inc (NASDAQ:GRPN) CEO Andrew Mason was forced out at the end of February. Two established executives, Ted Leonsis and Eric Lefkofsky, both investors in the company, will be co-chief executives from this point forward. I doubt very much that anyone reading this is shocked by the news. I find it encouraging.
It’s encouraging because it’s a sign that the adults have arrived for Groupon Inc (NASDAQ:GRPN). As I’ve written before, mature firms – firms that are worth investing in – behave like adults. If the CEO’s lifestyle and pronouncements are getting more positive attention than the company’s results something is very wrong with the business. In the end, a public firm is about returning value for shareholders by providing quality goods and services to customers. Nothing more. It shouldn’t be about the leadership or such.
Yes, you can point to Steve Jobs over at Apple Inc. (NASDAQ:AAPL) as a counter-example. Fine. But Jobs was an actual visionary. A genius in both what he thought the company should be and where he thought the customer base would go with the products Apple Inc. (NASDAQ:AAPL) produced. But there aren’t many visionary geniuses out there. Sure, there are a lot of CEOs and CEO-wanna-bes out there who would like to convince you they meet that standard…but 99.99% of them don’t, no matter how much ink they get in magazines.
It sounds like a good idea, pushing a hyperlocal set of coupons and such to promote businesses. I’ve certainly bought some down here in Charleston, SC (mostly for restaurants). But in the end it’s about making money with your concept, and Groupon Inc (NASDAQ:GRPN) hasn’t figured that out. It was all the rage a few years ago and that was nice, but there’s more to this drama coming.
That wooshing sound you hear is the value of Groupon’s shares. Even with all the users and positive media coverage the firm wasn’t making money, and investors knew it. In the last year shares have dropped 76.7%. Of course the EPS is negative and there’s no profit. Is it any wonder Mason was fired? The move could bolster Groupon’s shares in the short term, but only profitability can improve them in the long.
eBay Inc (NASDAQ:EBAY)
I consider eBay to be a tech company that has matured. The online auction site (not the only one for those paying attention – just the biggest) provides a useful service to both sellers and buyers, does it quietly and without drama, and crazily enough makes money. It’s just a crazy enough idea that it might work!
The firm’s stock has even done the growth thing this year. It’s up 50.4% in the last twelve months, and I think the world expects that growth to continue. A P/E of 27.51 strikes me as encouraging, without being all dot-com tech company insane. I do wish it paid a dividend, but I’m a growth and income type of investment guy. If you don’t mind the lack, then eBay Inc (NASDAQ:EBAY) can be a good investment for your portfolio.
Amazon.com, Inc. (NASDAQ:AMZN)
No lie, I’ve never been impressed with Amazon. Sure, I’m impressed at what the company has assembled. But that’s more a matter of size than anything else. Still, this far into the project shouldn’t it be making some money? Maybe? Well, the company is certainly admired, if nothing else. But profit would be good. Just a thought.
Despite all of my naysaying, the shares keep going up, and the spotlight stays on Amazon. And CEO Jeff Bezos knows how to play the media. At some point, though, people are going to expect a return. The stock is up more than 40% year-over-year, though a big chunk of that came in a late April 2012 surge. Since then it’s grown 13.9%. Still, that’s good and I can’t deny it. But the previous quarter’s P/E above 2,000 shows me that it’s overbought and people are buying the hype and not the reality. Good luck to them.