As an investor, should you put all of your money in one stock or should you spread your bets across many investments? If it is the latter, how many investments should you have in your portfolio? The debate is an old one and there are many views but they fall between two extremes. At one end is the advice that you get from a believer in efficient markets: be maximally diversfied, across asset classes, and within each asset class, across as many assets you can hold: the proverbial “market portfolio” includes every traded asset in the market, held in proportion to its market value. At the other is...
Following up on Groupon
In my last post, I made an attempt to value Groupon and came up with $14.62/share, before the voting right adjustment. Now that the offering is complete and the first day of trading is over, I thought it would be useful to take stock of general lessons that can be drawn from this deal. The offering price was raised to $20/share and the stock jumped another 40% during the course of the day. So, here are a few questions that I am fielding today...1. Is it possible that you are wrong in your assumptions and that other investors are far more optimistic about revenue growth/...
Are you ready to value Groupon?
After a series of missteps, it looks like the Groupon valuation is ready to hit the market on Friday, with the final pricing to be done on Thursday. To bring you up to date on this unfolding story, the initial talk during the summer was that the company would be valued at $20 billion or more. In the months afterwards, loose talk from management of how customer acquisition costs were not operating expenses and what should be recorded as revenues got in the way of the sales pitch. As management credibility crumbled, the value dropped by the week and it looks like the company will now go public at...
