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Michael Kudrna  

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  • Groupon: On Sale For A Limited Time Only [View article]

    The current market cap is just under $2B

    With $1B in cash, that means the market cap is really just $1B

    With 50 mil active customers, that means the value of each customer is about $20.

    The average "paying" customer and infrastructure is typically worth a lot more than just $20.

    FB paid, if I remember correctly, $45 per customer of WhatsApp when it was a free platform. Now they charge $.99 a year to new users (old users were grandfathered in I believe).

    So if FB paid $45 for a free customer (more than 2 times higher than GRPN's current valuation) to be monetized later, that would put Groupon paying customers at grossly undervalued at only $20 a customer.

    That is why they are focusing on growing that active customer base per yesterday's CC, something they claim they haven't focused on doing as a main focus since 2011/2012. This will also cure the FX problem because the only way to fix FX issues is to grow grow grow. This is just another reason people were upset with Eric back in Spring and are happy to see him no longer in charge.
    Nov 4, 2015. 03:36 PM | 2 Likes Like |Link to Comment
  • Groupon's billings drop in Q3; new CEO outlines plan [View news story]
    They'd lose all credibility with Rich if they sold it this fast. If Rich is trying to build a marketplace but they sold a key part of that marketplace this fast after JUST investing in it (which means it would be a waste of investment as the only true value of it is with the existing customer base of Groupon, the value of it is tiny if you don't give up all the NA customers alongside it)....they'd be contradicting themselves so fast that they'd have to change CEO's again.

    The value in the To Go system is tying it into Groupon's existing userbase. Without Groupon's userbase, the system is basically worthless. Why would Groupon sell their userbase without selling the entire company? The technology isn't worth much of anything without the userbase.

    I think it's FAR more likely that Groupon sell's their entire company than to just sell the Groupon To Go's not worth anything without Groupon's userbase tied into it.

    While I understand your history repeats itself scenario and usually agree with it, I don't see the stars aligning on this one without more data points that aren't built on guesses.
    Nov 4, 2015. 03:12 PM | Likes Like |Link to Comment
  • Groupon's billings drop in Q3; new CEO outlines plan [View news story]
    That's assuming a lot.
    Nov 4, 2015. 02:43 PM | Likes Like |Link to Comment
  • Groupon's billings drop in Q3; new CEO outlines plan [View news story]
    I didn't say there is bad advertising, I said maybe there are issues with the platform that they want to fix before advertising it.

    It makes no sense to offload it if they are building a marketplace, which they said multiple times they are attempting to be a one-stop shop and building towards. It would have to be a desperation move to unload it, which if that was the case, they'd be marketing it hard how great it is to unload it easier and at a better price.

    Your theory is tough to digest. It's an assume the worst case conspiracy theory scenario until proven otherwise.
    Nov 4, 2015. 02:36 PM | Likes Like |Link to Comment
  • Groupon's billings drop in Q3; new CEO outlines plan [View news story]
    There is clearly some reluctance to promote it and I can't seem to figure out why. My own stats show it's doing well for a new entrant into the game. Maybe there are a lot of complaints on the customer service side (errors and such from menu, not enough members staffed in customer service, etc...) that they are afraid to promote it until all the kinks are worked out? That is a fair guess on my part based on my experience with such companies and what they go through, but it's still just a guess.
    Nov 4, 2015. 02:16 PM | Likes Like |Link to Comment
  • Groupon's billings drop in Q3; new CEO outlines plan [View news story]
    Eastern? Meaning 13 minutes?
    Nov 4, 2015. 11:47 AM | Likes Like |Link to Comment
  • Groupon's billings drop in Q3; new CEO outlines plan [View news story]
    doggie, what time is he supposed to be on? I heard he was on this morning, but not later today.
    Nov 4, 2015. 11:16 AM | Likes Like |Link to Comment
  • Groupon: Another Major Flop [View article]
    But that tells me, if what you said is true, that Eric possibly didn't lie, but that is why Eric was fully disengaged/complacent and was seemingly forced from his position rather than stepping down at his own accord. Lawsuits will be pending on this one (and I believe the execs/board knows this) which is why I feel they had to make the switch of CEO and dump everything into Q3 to get a clean slate going forward.

    If a CEO can't tell you a good estimate of where revs will be 1 to 1.5 months into a 3 month quarter, that's very disengaged. It's a hard sell to say they thought it would ramp up for "unknown reasons" which is the "cover for a lie" if I'm pretending to be a psychologist right now. This is absolutely why they had no choice but to get rid of Eric and demote him....better if they could have gotten him off the board too, which will be impossible without lawsuits obviously.

    I do like Rich and his resume more than Eric, that is for sure. I was a harsh but fair critic of Eric...and became harsher with the poor rollout of the Groupon To Go system. I really like that Rich has a real marketing background, experience as an exec with Amazon, and as I've said for a long time that that is where they struggle, the marketing. Their marketing is non-existent, especially with their new Groupon To Go platform. I'm glad to hear the right rhetoric, but he didn't sell the story either, he simply put himself in a position of a results driven stock now. I'm really hoping that over the next 3 months, he releases PR's and blog posts, etc....that highlight successes with the company. The company needs a win in the column and he needs to sell the story of a win is in the works. This quarter was my worst case scenario prediction after Q3 and it seems to have happened (which is why I said we need to get past Q3 to get a clean slate again).

    The positive, in the short-term, is that risk buyers are back in the market and buying, so they will help fill some of the void of value buyers down here.
    Nov 4, 2015. 11:09 AM | Likes Like |Link to Comment
  • Groupon Is A Buy At These Levels [View article]
    Doggie, usually I don't disagree with you, but unless you believe the market is fully "logical and sane" 100% of the time, then it's absolutely not a valid point to use the 30%.

    The market is completely irrational and it's because it's irrational that value is unlocked and money can be made.

    Groupon To Go is a great deal for customers and a great deal for vendors, proof is in my own statistics from my own business. They are building a marketplace, as I've discussed previously so I wont' rehash lengthy detail upon detail again, that long-term is providing better opportunities for vendors whereas Yelp, on the opposite side of the equation, is hell bent on destroying relationships with vendors.

    1 Year ago, I wanted nothing to do with Groupon because all they wanted was me to heavily discount my product, which I refuse to do because I am successful without Groupon and I don't need to devalue my brand. Today, that is no longer the case. Groupon is not asking me to devalue my brand, they are asking me to give them a small percentage of the sale to help unlock extra sales with their 50 mil active customers. That is a path towards building relationship with vendors.
    Nov 4, 2015. 11:05 AM | Likes Like |Link to Comment
  • Groupon down 27.1% after resuming trading [View news story]
    Which would be enough time to ramp up growth to attempt to get max value for a buyout.
    Nov 4, 2015. 01:34 AM | Likes Like |Link to Comment
  • Groupon: Another Major Flop [View article]
    Thanks for chiming in Kevin, it's always appreciated.

    While the original intent of buybacks was to offset that, between July and Sept, we didn't get much selling (off the top of my head)? That would mean they really didn't need to press the buybacks during that quarter unless Eric thought it would miraculously boost the stock so that he could sell into it again regardless of where earnings would be (which would be another level of recklessness if true). Lots of unanswered questions with Eric that I'm hoping Rich doesn't allow himself to follow suit with. When Eric reaffirmed yearly guidance last, it makes you wonder if he was outright lying or completely complacent on the business.

    The guidance does seem very low and it would make sense if they play conservative to show some ER beats again, but we'll see how that works out. If they can't beat it, I will be very concerned about GRPN's future.

    I'm going to go over the CC transcript as I don't recall that specific question. Thanks for bringing it up.
    Nov 4, 2015. 01:32 AM | 1 Like Like |Link to Comment
  • Groupon: Another Major Flop [View article]
    In regards to the buyback. What makes me scratch my head is why they invested in buybacks if they knew they were going to disappoint with earnings.

    That is why the CEO change is important to me in fixing this. If they didn't make a CEO change...I would be very concerned. I think it's clear Eric either lied, was disengaged/complacent or a combination of both (so Bill is right, I do see more lawsuits in the future). It's reckless to do a buyback when you're not seeing your own numbers improve enough to stabilize the stock post earnings. Reckless is probably a kind word and whenever Doggie comes around to comment on here, he'll probably provide more accurate terminology.

    There is no way the board was happy with Eric after that. Those facts above would make any board of directors furious. I don't think Eric left on his own accord.
    Nov 3, 2015. 11:26 PM | 2 Likes Like |Link to Comment
  • Groupon: Another Major Flop [View article]
    What would they acquire though?

    They have a new growth machine for new customers in Groupon To Go (and their recent acquisition of Orderup that was nonexistent on their CC today), we just don't have any clarity on it. If I didn't have a restaurant in the highly competitive chicago market, I wouldn't have any clarity from GRPN management. Groupon To Go has overnight become the #2 online ordering platform behind GH in this market based on my own statistics as I am a very very high volume GH vendor. This food platform, when combined with actual marketing as I've argued for a while they haven't done any real marketing, will be a growth machine in itself. They just need to put some fuel into that machine and fire it up....which they still haven't. This is where I want them to add some marketing dollars to it and create some free buzz online via social media...this will improve customer metrics, the prerequisite to better financials. If I didn't tell everyone about Groupon To Go on SA, nobody would know anything about it (which pisses me off more than I can explain)...I'm hoping Rich provides more clarity sooner than later as Eric failed to show leadership and communicate the story properly, create buzz over it....all per my Groupon Article this past summer about failed leadership.

    If they spend $50 for a new customer (like their historical metric claims are) but they are slashing other overhead, they could theoretically break even on the marketing until it ramps up....which would lead to more marketing dollars being reinvested.

    If they intentionally guided lower with the intent of blowing away estimates, you will see them buy back at these lows knowing their next earnings report will blow it out of the water and rebalance these shares at a higher share price. Outside of that, I don't see them rushing to buy back shares if they don't expect better earnings in the near would be a waste.

    It's clear to me that Eric either lied for a while to shareholders, was completely disengaged and complacent, or a combination of both of those.
    Nov 3, 2015. 11:15 PM | 1 Like Like |Link to Comment
  • Groupon: Another Major Flop [View article]
    Well the company is showing "some" growth without really trying (they haven't focused on customer growth for years and "Groupon To Go" being rolled out nationwide will also improve growth as my chicago restaurant already has shown Groupon To Go as "overnight" the #2 Online Ordering Company overtaking all others outside of GrubHub at #1). That in itself is an impressive move to go from zero to the #2 slot beating competitors such as Eat24 from Yelp, for example.

    It's the FX that is masking the growth and the FX started working against Groupon in Q3 2014, peaking in negative impact in Q1/Q2 2015 before stabilizing in Q2 2015. That means a full year now, which unless the dollar breaks out again, will help stabilize future earnings.

    However, that's also where we have differing views. I think the US resumes inflating within 12 to 24 months and you disagree. I think the rest of the world inflating will force the hand of the US to inflate. If I'm right, Groupon resumes growing at a faster rate without counting their future investment in growth. If you're right, Groupon must execute the growth strategy efficiently, a harder but still very feasible path towards success.

    Either way, the right strategy is to obtain new customers, not just trying to focus on getting more money out of your existing customers.
    Nov 3, 2015. 10:40 PM | 2 Likes Like |Link to Comment
  • Groupon: Another Major Flop [View article]

    I didn't read the written transcript as my CC did cut in and out a few times, but with the new CEO, I do not believe we will be seeing significant buybacks right now unless they guided very conservatively with intent of making it easier to beat (big) future earnings releases.

    For the valuation, I'm not looking for any exact figures, just a ballpark figure is sufficient. There has to be a $ amount associated with what they currently have built and I'm curious how far off your number is from current valuations. You can easily argue this is no longer a growth play for the foreseeable future, but there has to be a value play somewhere at these prices. Even with the Q3 earnings not being what the bulls wanted, I see the damage as mostly done throughout the last 3 quarters and wouldn't be surprised if the AH low tonight isn't tested in trading tomorrow. I wouldn't gamble on that statement, it's just an opinion as I'm still digesting info. As I said before, Q3 is a big concern, but I believe the path will get easier now as they seemed to put as much of the neg as possible into one ER....which is ideal for a better future.

    Yes, I do see more restructuring cuts as they have MANY employees. They need to become leaner without sacrificing customer growth.

    I also see "all of this" as a potential preparation move to make Groupon more attractive for a buyout, particularly the CEO change and focus on customer growth....but I don't ever trade on such chatter. It does make for an interesting discussion on valuation though as at these levels, you have to determine a $ amount for the near 50 mil active customers. At just $50 a customer (which many would say is very very low and I haven't seen anyone make an argument that $50 is high), that's 2.5 billion valuation.
    Nov 3, 2015. 10:13 PM | 2 Likes Like |Link to Comment