Groupon Inc (NASDAQ:GRPN) should not be considered a joke anymore, a cautionary tale of an overvalued startup which steam seemingly ran out not too long after it made its initial public offering.
Dan Primack writing for Fortune says that Groupon Inc (NASDAQ:GRPN) should not elicit laughs every time its name is mentioned by those observing the market.
“Groupon not only was an original unicorn, but it remains a successful one. The company currently has a market cap of $4.9 billion, which is higher than it ever was valued by venture capitalists,” Primack writes.
Primack also notes that the “unicorn,” a term used for startups which are valued at $1 billion or more even before they go public, has consistently climbing revenue and EBITDA since its IPO. Furthermore, the firm has a lot of cash and no debt.
The company’s steam did not run out – it’s chugging along just fine – just that it’s the same people or groups of people who should know better who overestimated how much steam the company has, Primack says.
“If you want to criticize someone for overvaluing Groupon, take a good long look at public market investors. You know, the folks who are supposed to use all sorts of clear-headed, quantitative metrics (as opposed to VCs, who are said to pull unicorn valuations out of thin air),” Primack writes.
Groupon Inc (NASDAQ:GRPN) is actually fortunate and smart, the columnist writes, as the reason it’s still chugging along is because it went public when it went public. Had it done so later, it would have had a very hard time trying to survive a valuation decline as a private company, he says.
John Thaler’s JAT Capital Management LP owned about 14.38 million Groupon Inc (NASDAQ:GRPN) shares by the end of the September quarter. JAT Capital Management increased its stake in Groupon by a stunning 1,128% during that quarter, compared to their stake in the preceding quarter.