Risky business

Copper is in red territory today, town -2,03%, followed by Crude oil (brent), which is down -0,80%. Gold and silver is up. Asia is trading down today. Hang Seng is down -1,75%, Shanghai is down -2,86%, while Nikkei closed down 1% at 15,120,14.

Asian markets tumbled today. People are worried about the Ukraine crises and some are disappointed about the surprisingly weak Chinese trade data released today. All this, despite the surprisingly good news from the U.S on friday. Nonfarm payrolls was better than expected.

The commodity-sensitive Australian and Canadian dollars suffered today, as copper of which China is a major consumer, reached a four-year low in Shanghai. Australian and Canadian dollars lost half a percent against a steady U.S dollar. The Chinese yuan opened down 0,5%.

Groupon Inc (Nadaq:GRPN), is still the market leader in the daily deal voucher sales, but the stock is declining while this stocks seems to be a risky stock. Most of the Groupon`s customers are often struggling merchant partner who can`t afford to pay.

In worst case, if many of them go bankrupt, then Groupon will lose a lot of money. In addition; Groupon will pay back the customers if the merchant fails, and unused vouchers has increased to $725 million.

Merchants need to offer discounts of 50%, and share 50% of the rest with Groupon. As you know, this is a risky business. Merchants do not earn money and have no control if too many vouchers are issued.

Groupon say they are «the morst effective local advertiser tool» available for marketers, but I think that the shoppers are the winners here. Mainly because the shoppers are one-time shoppers looking for good deal, better called «coupon hunters», which is not loyal repeated customers.

This can be a ticking bomb, and the stock is now trading at $8,60. The stock will open down today -0,58%. The stock is down -67,16% from the top, and so far this year the stock is down -26,90%. Groupon shows us that not everything in the social space is rosy.

Revenue growth and user growth is the king in the stock market.

Groupon logo

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Filed under Commodities, Stock market, Stocks

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