Groupon Is Not A Tech Company. Why Was It Valued Like One?

The summer of discontent — well, that’s what it seems to be from the perspective of the not-so-new web darlings — might be coming to an end, but months (perhaps years) of misery awaits these erstwhile rocket ships. The news reports of late have reserved particular vitriol for Groupon, the company that has seen its market valuation decline almost 82 per cent since its went public.

Over the weekend, The New York Times columnist James Stewart blamed network effects going into reverse for the declining fortunes of the new web companies, though I don’t think his argument applies to Groupon, which has its own unique set of challenges and isn’t in the same class of companies as Facebook. Today, Wall Street Journal reports that investors like Kleiner Perkins and T. Rowe Price have taken it on the chin with their Groupon investment, but for now they remain believers in Andrew Mason and rest of the team.

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