Can you really say "I told you so" when the threads about the IPO were full of people saying "this is a terrible idea, how can I short the stock?"

anyone would want to invent a time machine for a cool $5 billion dollars?? because that much Andrew Mason would pay you to get back to the table split seconds before he said "no" to Google's "we will pay you $6 billions for your website".

Rumor has it that Google got a look at their books during the negotiation and cancelled the deal. They publicly gave the story of groupon denying Google to allow them to save face and attract more investors

That's very unnerving if it's true, because, by going along with "Groupon is worth $6bn because Google offered that to us and we turned it down", implies Google had a hand in creating that extremely high perception before their IPO.

If Google did infact have the chance to look at the books (which I'm sure they did), and then allow that "$6bn meme" to circulate -- well, that's evil isn't it?

Just three letters for you: NDA.

To expand on that a bit: If google had made public what they thought they found they would have been very much open to a lawsuit with some significant chance of success.

Breaking an NDA in such a situation is unheard of, every investor is supposed to make up their own mind and do their own homework before they decide to invest or not.

Any legitimate concerns about this would revolve around the question of whether or not groupon was forthcoming in their pre-IPO filings. If there is any proof to be found with google you could try to persuade a judge to grant a subpoena of people at google familiar with the deal, but google should never by themselves reveal any of this.

So: no, not evil.

Although nothing preventing Google from releasing a statement saying they decided not to buy Groupon.

If the story is true, it seems very strange that they wouldn't set the record straight (obviously without breaching any confidences or disclosing anything specific about Groupon).

I'd imagine in those negotiations there are agreements that everyone has to basically be tight lipped even after the deal falls apart. On the flip side, if Google had said too much it might make other business nervous to enter into negotiations with them in the future.

Someone wasn't so tight lipped that the word didn't get out that they offered $6 billion for the company.

If that wasn't true, someone in Google did have obligation to deny it - denying it off record with no further comment would hardly have been saying a lot.

I was not Google's job of sinking Groupon. It was also every investor's job to check the books before the IPO.

They would have gotten slimed with the evil moniker if they had decided to trash Groupon in the press. Damned if they [do|don't]. Adopting that slogan was one of the dumbest things they ever did, people love to bash them over the head with it.

Actually most of the early investors who would have won in that deal got a lot of money out from the later stage investors and more in the IPO.

I'm not sure they'd have made more in that deal. Honestly most of the folks invested early made a ton of money and now the guys at the backend are looking for a chair as the music ends.

Is it possible that the dodgy side of groupon was seen earlier and predicted earlier by the google MnA team and it wasn't Andrew Mason that said "No" ?

Im sure if nothing has changed since the early days of groupon till now, the skeletons now are still the same as before, google was just smart about it, did the math and said no way and allowed Andrew to walk away and speak about the deal however he wished.

On another note, if groupon collapses is it a good thing for the daily deals market ie, more smaller ones take their place, better competition better monetization strategy or does it spell the end for this market ?

What do people think ?

Why would Andrew Mason pay $5billion when the company is still worth $6.83B today?

Giving away $5B to get the company's valuation to $6B would only make sense if Groupon were valued below $1B right now. (unless you're insinuating that in the near future, Groupon will be below this threshold, or even in bankruptcy)

Time to short the stock?

You can try. However, due to the precarious nature of the stock it would be hard to find anyone who will lend it to you. However, if you did find someone willing to lend you a portion, it would cost you almost 100% in fees: http://www.reuters.com/article/2011/11/15/us-groupon-shortse...

Note that if you'd bought the put option mentioned in the article you would have made a 4x return in 6 months. No borrowing needed.

But you wouldn't use the same amount of capital on an options trade. For example, if you're bankroll is $25,000, you might use it all to short the stock but it would be foolish to use it all to buy a put. It's more likely that you'd use a much smaller fraction of your stock purchasing unit size for options trading since the risk of losing 100% is higher.

you don't need to borrow the stock to short it. You could buy puts, sell calls, sell a CFD, spread bet...

No. Right now, with the bad news already coming out, the harm is increasingly priced into the stock price. The time to short was when they IPO'd and half of everyone saw this coming.

Normally I have a rule of "never short". Wish I'd broken it this time :-(.

It's always been virtually impossible to borrow the stock in order to short it; the float is small and the cost of borrow is extremely high.

Yeh, i was looking/playing the puts and it was traded very thinly as well, took ages to get bites so didn't try again after i did it once.

Why never short?

Because a short has a hard limit on the possible gain (the amount you got when selling minus the borrowing cost, if you can buy it back at zero when you have to return the stock), but no limit on possible losses (if there is a rally or a short squeeze and the price at which you have to buy it back is ten or hundred times of what you sold it for). This is especially nasty if your trade partner knows you have shorted 40% of the traded stock and he controls 61%: he can demand any price he wants for the 1% you must buy from him to fulfill your side of the trade. http://www.nytimes.com/2008/10/30/business/worldbusiness/30i...

It's already beaten down, but I expect more nastiness for the price when they announce their quarterly fiasco^H^H^H^H^H^Hresults and the IPO lockups expire, both within a few weeks mid-May to early-June.

Remember, stocks can go to zero!

About a month ago would've been better.