tag:blogger.com,1999:blog-8152901575140311047.post3918800117003309697..comments2024-03-28T12:49:46.624-04:00Comments on Musings on Markets: Following up on GrouponAswath Damodaranhttp://www.blogger.com/profile/12021594649672906878noreply@blogger.comBlogger16125tag:blogger.com,1999:blog-8152901575140311047.post-40243877891557351112011-12-04T10:34:26.035-05:002011-12-04T10:34:26.035-05:00When is your next post coming up?When is your next post coming up?anant krishhttps://www.blogger.com/profile/01891986030733828502noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-45441315849502296212011-11-27T21:12:50.656-05:002011-11-27T21:12:50.656-05:00Making any sort of play on groupoun stock might be...Making any sort of play on groupoun stock might be quite hazardous due the the few number of shares floating around. Market manipulation could be going on. Additionally the very high beta of the stock could hurt shorts the general market starts rallying on Europe news again.Angad Guglanihttps://www.blogger.com/profile/03821654544982319292noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-85328695247600868712011-11-27T09:26:39.961-05:002011-11-27T09:26:39.961-05:00looks like the stone is falling back to ground!
G...looks like the stone is falling back to ground! <br />Groupon short position almost 3m shares: Nasdaq<br />http://www.moneycontrol.com/news/world-news/groupon-short-position-almost-3m-shares-nasdaq_625088.htmlPranav Pratap Singhhttps://www.blogger.com/profile/01893712441478627342noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-65563030721873732992011-11-27T09:25:18.870-05:002011-11-27T09:25:18.870-05:00This comment has been removed by the author.Pranav Pratap Singhhttps://www.blogger.com/profile/01893712441478627342noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-29860599164868252472011-11-09T07:23:51.168-05:002011-11-09T07:23:51.168-05:00Another great post! I got a ceiling for overvaluat...Another great post! I got a ceiling for overvaluation over DCF for small high growth companies (20%), at my risk obviously. 9 years back, while doing MBA, I had read your paper on real options and still believe that it is the right method of valuation. If we could account for inputs that affect the value of real options like management quality it might make it more usable. But, would that mean modifying the assumption of geometric Brownian motion. Uff.. why did not I take the course on OFD in MBA!Pranav Pratap Singhhttps://www.blogger.com/profile/01893712441478627342noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-80175460509266017282011-11-07T12:06:08.612-05:002011-11-07T12:06:08.612-05:00It depends on your definition of value creation. I...It depends on your definition of value creation. If you have incurred the cost (setting up the dental office, buying the equipment), then the marginal cost of the added customer is close to zero or very low. Selling the product at a low price is still value added (not destroyed). That is why I framed it in terms of excess capacity.Aswath Damodaranhttps://www.blogger.com/profile/12021594649672906878noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-86754069329124996612011-11-07T10:04:28.402-05:002011-11-07T10:04:28.402-05:00Aswath,
As I read this article it appears to me t...Aswath,<br />As I read this article it appears to me that the analysis takes into account only one side of the 2-sided market Groupon operaties in - the end consumers buying coupon. But how long will businesses keep giving away theie profits in the form of 50% off discount and another 25% to Groupon? Isn't that value destruction? Groupon's valuation should also be based on its share of net new value created, which isn't the case here as we only see value redistribution.<br /><br />Regards<br />-Rags SrinivasanAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-60447352935939493322011-11-06T13:21:59.752-05:002011-11-06T13:21:59.752-05:00Here is our SPX EOD WEEKLY: our WEEKLY TIMING MODE...Here is our SPX EOD WEEKLY: our WEEKLY TIMING MODEL went to a SELL last friday 04112011.<br />http://followmarketrend.blogspot.com/2011/11/spx-weekly-ind-weekly-timing-model-went.htmlFffhttps://www.blogger.com/profile/16172119771788353498noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-10132879530094406592011-11-06T05:57:37.531-05:002011-11-06T05:57:37.531-05:00Gert,
I did consider also making the initial cost ...Gert,<br />I did consider also making the initial cost of capital a distribution, but chose not to do so.. But it could very easily have been done..<br />Loganathan,<br />Good point. I may do something on these lines next year... when I update my global data.Aswath Damodaranhttps://www.blogger.com/profile/12021594649672906878noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-62067936118042198802011-11-06T04:40:13.170-05:002011-11-06T04:40:13.170-05:00I wonder how many companies there are globally tha...I wonder how many companies there are globally that after at least 10 years in existence have an operating margin of 23% or more and revenues in excess of $ 25 billion. It would also be interesting to know the compounded revenue growth of these companies over their best 10 year period. As one can guess this would give an insight into the companies there are which meet the above criteria and enable a comparison with Groupon to see if Groupon has any characteristics comparable to these companies.Loganthanhttps://www.blogger.com/profile/14928670842389318384noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-68494527079585361192011-11-05T17:07:13.058-04:002011-11-05T17:07:13.058-04:00Thank you very much for the staunch defense of DCF...Thank you very much for the staunch defense of DCF with its broad-brush simplicity and robust logic. The scenario analysis above is particularly useful along the lines of Rappaport's Expectation Investing. <br /><br />In this scenario analysis, however, you only sketch the difference of opinions and expectations regarding opportunity. Could it not be that a major difference of opinion exists regarding risk: early investors may have a lopsided opinion of the operational, strategic and financial risks? And what about the perceived duration of "unfair competitive advantage" (Pip Coburn)?<br /><br />Such unbalanced opinions may not be straightened by short-selling: effective opinions and expectations in the capital markets may not be perfectly balanced when believers congregate in a small space such as an IPO. I think you describe that aspect very well: "My problem with selling short has always been that I don’t control my time horizon; the person who has lent me the shares does."@Gert_Shttps://www.blogger.com/profile/06025899921250732129noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-87272943984118793742011-11-05T06:50:14.574-04:002011-11-05T06:50:14.574-04:00I find that the process covered in #1 is helpful b...I find that the process covered in #1 is helpful because it provides the scenario under which you may be convinced to adjust the original valuation. The question then becomes re-framed: am I willing to invest on the basis there will be greater than 60% growth over the next five years?<br /><br />This can lead to other analysis projects - looking at comparable historical situations, contagion models, etc.David Waltzhttps://www.blogger.com/profile/03415644204743030961noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-15289252269203359592011-11-05T01:40:52.480-04:002011-11-05T01:40:52.480-04:00This comment has been removed by the author.Jiten Chadhahttps://www.blogger.com/profile/17922059714712083214noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-82117733439074708872011-11-04T21:04:49.673-04:002011-11-04T21:04:49.673-04:00Isn't that a loaded question? If you premise t...Isn't that a loaded question? If you premise the question by calling them "overvalued', then the answer will be obvious. The real question is whether we can tell the "overvalued" IPOs from the "high but fairly valued" ones.Aswath Damodaranhttps://www.blogger.com/profile/12021594649672906878noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-16444643158921988392011-11-04T20:54:17.232-04:002011-11-04T20:54:17.232-04:00Have you used the same model to valuate high flyer...Have you used the same model to valuate high flyers like fio, bidu, crm on their IPOs? Can you name a few overvalued IPOs that are still flying hi after X years as public companines?Unknownhttps://www.blogger.com/profile/15701184403291392601noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-25052731865033507982011-11-04T20:52:34.801-04:002011-11-04T20:52:34.801-04:00Have you used the same model to valuate high flyer...Have you used the same model to valuate high flyers like fio, bidu, crm on their IPOs? Can you name a few overvalued IPOs that are still flying hi after X years as public companines?Unknownhttps://www.blogger.com/profile/15701184403291392601noreply@blogger.com