Yes, T-R, the dot.com bubble was real and scary. I almost busted out...
I recognized the bubble and shorted too soon into the parabola of amazon.com, ebay, and etoys.
BUT I failed to obey an important rule of shorting at a parabola -- DON'T without a catalyst.
And then, one horrid pre-open, the two major cheerleaders, Mary Meeker and Henry Blodgitt, invented yet more novel metrics to justify their prices, and these monsters popped another 25% and the margin calls came aringin'
GROUPON brought back bad flashbacks for me at its IPO when Andrew Mason played the same bs metrics game:
Remember that weird financial metric Groupon unveiled in its initial public offering paperwork, Adjusted Consolidated Segment Operating Income? (We imagine the acronym was pronounced “Ack-Soy.”) Well, goodbye to all that.
As our corporate cousin Kara Swisher said was coming, Groupon has dropped the financial metric from its updated IPO document, after the SEC raised questions about whether Ack-Soy was making the daily-deals company look prettier than it really is.
Ack-Soy would be Groupon’s consolidated operating income, excluding the costs to land new subscribers and excluding some non-cash charges. In 2010, Groupon generated adjusted CSOI of $60.6 million. Ooh, profits!! Oh, wait…
In standard accounting terms, which includes a remarkable $263 million of marketing expenses, Groupon posted an operating loss of $413 million last year. That’s quite a difference.
Here’s a list of things Ack-Soy doesn’t include: Marketing costs and other expenses to expand its list of subscribers; stock issued to employees, management or companies Groupon buys; interest expenses or other outlays to repay debt; payments to the tax man; and so on.
Just to illustrate how much Groupon touted its own personal financial magic, “CSOI” was mentioned 45 times in Groupon’s initial IPO filing. In the updated document today, there’s just a single mention, in the unusual letter to investors from Groupon’s Wacky Man in Chief, Andrew Mason. (Correction: CSOI was mentioned 12 times in the updated IPO document. Adjusted CSOI was mentioned just once, in the letter from Andrew Mason.)
“While we track this management metric internally to gauge our performance, we encourage you to base your investment decision on whatever metrics make you comfortable,” Mason told potential investors. Thanks, buddy. We will.<<
Their balance sheets are healthy because they've cut employee numbers down to the bare bone, and have reduced their overhead to chump change. This economy/country is a house of cards waiting to fall. Bernanke can play this charade for only so long, and eventually reality will set in. I would say there is a bigger catalyst now, then in 2008. I made the mistake of not shorting then, and won't make that mistake again. Best of luck to you.
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