Groupon A Steal At $6 Billion
Not a day goes by that Groupon isn't in the news. Starting as a small-town one-deal-per-day website, Groupon has quickly grown into a dot-com powerhouse that has excited retailers and consumers alike.
All signs indicate that Google Inc. (NASDAQ: GOOG) will swoop in and purchase Groupon this week. The latest estimate is that the company will sell for $6 billion. But is it worth the price?
- While Google could acquire Gannett Co., Inc. (NYSE: GCI) for slightly less, Groupon will continue to grow much faster than Gannett could ever hope to.
- Groupon is a new company with a fresh take on a tried-and-true system for discounting consumer purchases.
- Groupon Stores takes this concept even further, allowing retailers to set up virtual stores with Groupon and create as many deals as they want.
- Just as Amazon (NASDAQ: AMZN) owns online retail, Groupon will own local retail.
- In essence, Groupon will do for retailers what Wal-Mart (NYSE: WMT) did for consumer goods manufacturers. Every manufacturer wants to sell its goods at Wal-Mart. Soon, every retailer will want to offer special deals through Groupon.
- Groupon's retailer demand has only just begun. As an increasing number of consumers visit the site for exclusive deals, retailers will be all but required to use Groupon's services.
- If Google wants to be in charge of Groupon's innovations – and the profits they will reap – the company needs to make an acquisition right now.
Furthermore, Groupon offers a Deal Feed that gives users a personalized stream of deals, which are updated throughout the day. Users can view the deals posted by every merchant they follow, and that's not all. They can also take a glance at the recommended deals, which Groupon compiles from user information (such as their shopping habits).
Groupon is expected to earn more than $500 million in revenue by the end of 2010. At the rate the company is growing, that number could multiply four or five times in the next three years.
As it stands now, the estimated cost of Groupon has more than doubled since Google was first rumored to buy the organization. If Google waits too long, the price could easily rise to $10 billion.
Thus, Google shouldn't wait any longer. The search engine giant should do whatever it takes to complete the Groupon acquisition as soon as possible.
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