Lefkofsky: Don’t Compare Groupon to Facebook. Okay, Dude, We’ll Compare You to eBay
Groupon (GRPN) co-founders Erik Lefkofsky and Brad Keywell sat down for a public chat at the gabfest they’ve started, Chicago Ideas Week. Speaking at the city’s contemporary art museum, Lefkofsky said it’s a mistake to lump Groupon in with social media stocks like Facebook (FB), Zynga (ZNGA) and LinkedIn (LNKD).
“Facebook and Twitter are social by orientation. Zynga is a gaming company that happens to do a lot of business on that platform. Groupon really isn't,” he said, according to Crain’s Chicago Business.
Even though he doesn’t check stock prices more than once a week, he probably doesn’t like this chart.
So ok, if not as a social media stock, how should we categorize Groupon? Now that it and eBay (EBAY) are moving into each other’s territories, we could try comparing those. Both will offer daily deals. Both aspire to be crucial to local commerce. Both have point-of-sale payment systems, eBay’s being the far larger PayPal.
It can be hard to compare these two. EBay dwarfs Groupon by market cap.
And looking at revenues is difficult because eBay is a more mature company, both financially and culturally -- unless eBay chief John Donahue has been chugging beer at company meetings like Groupon’s Andrew Mason did.
But it’s interesting to compare to their expenses.
Groupon’s revenue growth is higher but falling dramatically.
And there’s a clear difference in their profit margins.
The fact is that while people aren’t posting status updates or playing team games on Groupon, it makes sense to compare it to other companies that launched around the same time. Investors can differentiate between IPOs, as they’ve done with LinkedIn.
Groupon, concerned, is hiring an ad agency to polish its image. But while branding is important, proving your business model is, too.