GRPN and YELP, two recently listed stocks that I consider to be worthless. Billions of dollars of bull.
Why?
Groupon sells discounts for group purchases. Businesses that offer these discounts make the assumption that this is an effective marketing tool to attract customers who will become repeat business in the future at the full non-discounted price.
That just happens to be absurd. A simple rule of marketing is that people will not pay more for the same object or experience than they paid the first time. Another rule of marketing is that people who seek out discounts are not desirable customers for the long term.
After Groupon has exhausted all the junkie ignorant businesses, it will fail.
Yelp has a different problem. Yelp is presumably a business that offers customer criticism and complements about businesses they have used. If you Google Yelp on this blog on the left, you will see that I wrote a blog years ago that continues to get an endless stream of complaints from business people who found that Yelp offered to sell them advertising. When the business refused to buy advertising they found that criticism of their business move from nonexistent to excessive in the first few lines of Yelp comments.
This type of crooked, dishonest behavior will put Yelp out of business either because of government action, lawsuits or public understanding that supports an honest competitor.
I won't sell short these two stocks because I don't know how long they will take to fail. But they will fail.