Groupon IPO was billed to be the IPO of 2011 but due to market uncertainties this year and doubts about company practices, doubts started creeping up. With few weeks to go before the IPO, there is a feeling demand for the stock is higher than anticipated. Groupon is even revising is price target.
Barron’s, the weekly finance newspaper has dampened the feel good factor. According to Reuters, analyst at Barron have a negative recommendation for Groupon:-
Investors may want to avoid Groupon Inc’s high-profile IPO this week because the deals and coupon website operator has an unproven earnings record and slow growth, according to Barron’s newspaper.
It said that a a $10 billion market value is a lot for a company with no profits and an unproven business model and this IPO is one deal to avoid. In other words, Groupon is a ticking time bomb!
Personally I think, this talk that the daily deals market has a low barrier of entry and Groupon can be out foxed by a new entrant is abit over rated.
Real Barriers To Entry
Groupon has nearly 4000 employees, this is evidence that this is a labour intensive industry and new entrants will have to invest heavily to compete. Groupon has an email list of over 30 million subscribers. Any one who has done Internet marketing will tell you to get people to sign up to an email list is hard work. Already other wannabes daily sites have closed shop or scaled down their operation, this include Facebook and Yelp. Google has also gotten into the act after failing to buy Groupon for a reported $5 billion. But Google is a search company that has failied to replicate it’s search success into other areas.
The biggest draw back for wannabe daily deals site is the thin profit margins, and they are getting thinner. What is the point of investing millions in a daily deals site for low returns?
written by Constantine Njeru
\\ tags: Barriers To Entry, Barron, Earnings Record, Feel Good Factor, Market Uncertainties, Price Target, Reuters
Marc Faber is an investment analyst, he is best known for the Gloom Boom & Doom Report newsletter. The newsletter publishes Marc Faber investment advice and investment tips. Faber has been nick named ‘Doctor Doom’
Marc Faber Track Record
His market advice since 2000 is quite accurate.Faber predicted the rise of oil, precious metals, other commodities, emerging markets and especially China in his book Tomorrow’s Gold: Asia’s Age of Discovery. He also correctly predicted the slide of the U.S. dollar since 2002 and the 5/06 and 2/07 mini-corrections.
Marc Faber Investment Advice & Investment Tips
- Don’t confuse luck with insight – Faber is famous for advising his clients to get out of the stock market one week before the October 1987 crash. However Faber said that this prediction was “accidental”.
- Market Timing is very difficult
- There is no value in US bonds – His current tag-line is: ‘buy a $100 US bond and frame it to teach your children about inflation by watching the US bond value diminish to almost nothing over the next 20 years.
- Buy gold and other metals – He has said that investors should consider holding part of their wealth in the form of precious metals “because they can be carried”.
- Faber believes there are few value investments available, except for farmland and real estate in some emerging markets like Russia, Paraguay, and Uruguay
written by Constantine Njeru
\\ tags: Age Of Discovery, Bond Value, Commodities, Doctor Doom, Doom Marc Faber, Emerging Markets, Farmland, Gloom, Gold Asia, Inflation, Investment Advice, Investment Analyst, Investment Tips, Market Advice, Market Timing, Precious Metals, Report Newsletter, Stock Market, Tag Line, Value Investments
Meredith Whitney, the banking analyst who won fame for predicting that Citigroup would be forced to cut its dividend in 2008, says in businessweek/bloomberg article, she predicts and forecasts as many as 100 municipal defaults in 2011, adding up to “hundreds of billions” in debt.
written by Constantine Njeru
\\ tags: Billions, Businessweek, Citigroup, Dividend, Meredith Whitney, Who Won Fame
The only stock analyst who has a serious analysis for Dow Jones Industrial index is Jim Cramer. In his December report for the street, Cramer wrote his assessment of 30 Dow Jones stock and his Forecast & prediction for them for 2011.
Dow Jones Forecast 2011
Jim Cramer has a target of 13,365 for the Dow Jones in 2011 — a 16% gain.
Dow Jones Prediction 2011
Cramer did a thorough Job of evaluating 30 DJIA stocks to justify his 13,365 target. check out Cramer post December report.
written by Constantine Njeru
\\ tags: Amp, Djia Stocks, Dow Index, Dow Jones, Dow Jones Industrial, Dow Jones Industrial Index, Jim Cramer, Job, Stock Analyst, Stock Forecast, Stock Prediction, Target
Goldman Sachs has been busy receiving orders from hungry investors wanting to buy a piece of Facebook. According to Wallstreet Journal article, the demand for Facebook stock is so high and now Goldman Sachs plans to stop taking orders for shares of Faceboook inc.
Scanty Facebook Financial Report & Statement
This high demand is despite the scanty financial disclosure from Facebook inc. The journal reports, Goldman has provided some potential investors with little more than a snapshot of Facebook’s online traffic, advertisements and other basic measurements, with no disclosure of the Palo Alto, Calif., company’s bottom line.
Facebook Financial Report & Statement 2009
The journal reports, in the offering document, Facebook had net income of $200 million in 2009 on revenue of $777 million. Financial report & statement for 2010 weren’t disclosed.
written by Constantine Njeru
\\ tags: Advertisements, Amp, Bottom Line, Facebook, Faceboook, Financial Disclosure, Financial Statement, Goldman Sachs, Investors, Journal Article, Measurements, Net Income, Online Traffic, Palo Alto, Snapshot, Stock, Wallstreet Journal, Weren
I was reading CNET and they had an article that analysed the amount of money Apple Inc makes on each Iphone. The analysis was by T. Michael Walkley of investment firm Canaccord Genuity.
Apple sees a gross margin of 50 percent and operating margins of around 30 percent on its iPhone. That’s within an industry where most handset makers struggle to turn a profit, or reach operating margins of even 10 percent.
As a result, he said, Apple took home 39 percent of the mobile phone industry’s overall profits by selling around 17 million iPhones during the first half of 2010.From CNET article
Apple Analyst Revenue forecast for 2011 to 2012
Walkley is forecasting sales of $63 billion for Apple in fiscal 2010, $82 billion in 2011, and $93 billion in 2012. That compares with $42 billion in 2009.
written by Constantine Njeru
\\ tags: Amount Of Money, Cnet, Gross Margin, Handset Makers, Investment Firm, Iphone, Iphones, Michael Apple, Mobile Phone Industry, Operating Margins, Profit Margins, Profits, Walkley
With BP Oil spill on the gulf of Mexico in the news 24-7, all that negative news vibe has had a negative impact on BP stock. Since the crisis begun BP stock holder have lost 80 Billion dollars of market value.
BP is facing lawsuits and cost of clean up. There is growing fear that the cost might be so high such that BP could be driven to the ground. The CEO has denied the possibility of going under, insisting BP finances are strong enough to withstand the current crisis.
After looking at BP finances I agree with the CEO.
Credit Suisse Group AG estimated the total cost of the clean up may reach $37 billion.
According to BP 2009 results, BP balance sheet was like this:-
Cash equivalents – 8.3 billion dollars
Total Assets – 236 billion
BP Balance sheet analysis
Lets assume BP final bill is 37 billion dollars as estimated by credit Suisse, BP has a two options to pay this bill.
- Sell Assets
- Borrow new money to pay the bill.
BP has high value assets spread all over the world. BP can sell off some of these assets to raise the money it needs. In it’s balance sheet there is an item called long term investments, which is valued at 37 billion, this alone can be enough to offset the clean up bill.
With the price of oil projected to remain high, BP will continue to generate robust revenue. They can issue new debt based on projected revenue.
Unless the cost of clean up sky rockets, BP should withstand the Gulf of Mexico crisis
written by Constantine Njeru
\\ tags: Balance Sheet Analysis, Billion Dollars, Bp, Bp Oil Spill, Cash Equivalents, Credit Suisse, Credit Suisse Group, Group Ag, Gulf Of Mexico, Mexico Crisis, Negative Impact, Negative News, New Money, News 24, Price Of Oil, Sky Rockets, Stock Holder, Term Investments, Value Assets, Vibe
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