What do you mean by their "cash yield"?
I thought people investing in Groupon were doing so because they thought it might continue to grow as it had been, and potentially be absolutely massive.
A pure cashflow analysis would indicate that YouTube was worthless. But if YouTube stock had been offered on the market at this point, you can be certain that it would have been given a considerable positive value. This is due to the chance that the company would become profitable or make a large exit in the future. You need to also take future revenues (or a chance of future revenues) into account when making a guess at the market value of a company.
Having said that, Groupon is not a startup: 7,000+ employees, over $500m in revenues, considerable international presence, large M&A transactions, etc. This kind of company should be be valued using a DCF. Growing at 100% per annum is no excuse to be able to perform such exercise. The devil is in the detail, and trying to find excuses to argue that Groupon is a startup, and consequently valuing it by god knows what random vanity metric is not a valid argument.
Can you give me a data based argument/point that shows that Groupon is not overpriced at $20/share? I have given you one.
Bottom line: all I'm saying is that Groupon should be valued fairly, $20/share is not a fair value, it's overpriced. Investors are left with no upside. I'm not saying that Groupon hasn't got a valid business.
