"Be Wary of Groupon"
By JIM CRAMER
NOV 03, 2011
4:30 PM EDT
"So Groupon's (GRPN) initial public offering is being priced at $19 to $21 per share? That's what they are going to do? That's the game they are going to play?
We saw these same kinds of walk-ups from the low teens to the high back in 1999. Saw it with TheStreet (TST). Go read about it in Confessions of a Street Addict, where I exposed this ridiculous practice.
Except this time, it is worse. The bankers are juicing this one like you wouldn't believe with only 5% of the float being sold -- half of what the other dot-coms of this era offered.
So, forget the fact that Groupon has a ton of competition, now and in the future.
Ignore that it cut spending to show more profitability, but said that it could ratchet it back up after the deal is completed.
Ignore the repeated bizarre methods of accounting that the company has used for its financials.
And forget that insiders, who aren't selling on the deal , have been selling all along.
What's happening here is nothing short of the worst kind of repetition of the previous era where so many lost so much money and never came back again.
I predict that Groupon could be very much like CBS MarketWatch, the deal that launched hundreds of dot-coms with its opening a fivefold increase from the pricing.
That's right.
You heard me.
I think Groupon could repeat that travesty, and no one, certainly not the Securities and Exchange Commission, is flagging this. All the SEC cares about is disclosure, not manipulation to cause a pop, which is what's happening here.
So go get as much as you can.
But figuratively, here's your hat, what's your hurry, and don't let the Groupon door slam you on the way out tomorrow by noon, which I suspect could be about the high-point of Groupon's trading."
(in
www.realmoney.com)