Groupon, the online coupon company that many of us have come to enjoy, is coming public this morning. The company is selling 5% of their company stock to the public in what is called an IPO (initial public offering). Before today, the average person couldn't own stock in Groupon, but when the market opens in about 30 minutes at 9:30, anyone with a stock broker or investment account can go try to buy Groupon stock.
Why am I mentioning this? Well, I personally love the deals I get from Groupon, but I wouldn't buy the stock this morning and I would caution anyone considering doing so. The IPO is being overhyped because it's a "new" company and the average investor loves being part of something they can talk about over football or at church. Here's the conversation"
"Hey, were you able to get any of that Groupon stock on friday? Yeah I did, I had to pay up for it a bit b/c it shot straight up when the market opened but yeah I still got some..the stock price is gonna go through the roof".
Not so fast. Yes I believe the stock is going to see a strong pop at the open this morning, but I believe that it will be short lived, and the average investor will be caught buying the stock at too high of a price. Groupon while a great idea and a good company, is losing money (last quarter the company lost 271 million). On top of that, the company is having some serious accounting issues and is going through an audit. Not to mention that while the idea of electronic coupons is something somewhat new and useful, it would take nothing for Amazon or Google to get into the business with hardly any start up cost and take Groupons business; I just think that it's only a matter of time before the online coupon space has multiple competitors in it.
So simply put, if you decide you want to buy some Groupon stock this morning, wait....wait for the hype to settle down. If you buy any stock first thing this morning, don't just hold on to it, try to flip it for a quick little profit. If you don't want to play the buy and flip game, just sit back and watch the price action. I expect the stock to fly at the beginning of the day, but then I think the high price of the stock will be reached around lunch, and then start coming down.
You wanna buy Groupon's IPO first thing this morning? Don't do it. It's your money, but I've seen this movie before and it doesn't usually end the way you want it to.
