Groupon, Inc. Message Board

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Technology Stocks : Groupon, Inc.

GRPN 18.55

-1.7%

Nov 11 3:59 PM EST

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To: stockman_scott who wrote (81)	8/15/2011 8:49:44 PM
From: Glenn Petersen	Read Replies (4) of 480

While I have no desire to defend Groupon's business model, the company did legitimately generate $58 million from operating activities during the first six months of 2011. They will be fine as long as they continue to grow their sales and resist the temptation to pay the merchants on an accelerated basis. With luck, they can get their marketing expense under control before their growth slows or LivingSocial forces them to treat the merchants better. Their cash flows remind me of the early stage SaaS companies who finance their marketing losses through the collection of prepaid subscriptions. Most restaurant companies have negative working capital. They finance their operations through their customers who pay with either cash or by credit card (which turns into cash within three days).

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