[bcostlow]

But if you take a look at their SEC filing, $203 million of their 2010 expenses were one-time acquisition related. So the operating loss isn't being reduced as quickly as one might think.

Other warning signs. Working capital deficit was larger at the end of Q1 '11 by about $32 million and free cash flow is going down.

Plus, since all the costs are sales & marketing related, they're not boxing anyone out by building large-scale infrastructure (Amazon, Google) or making customers sticky (Facebook).

I would hazard a guess because they own ad-delivery systems, Facebook or Google could reach the number of people Groupon reaches for a lot less marketing dollars.

[gthank]

You won't see me saying that I think Groupon is a great value or anything, but I think that you have to acknowledge the difference between the people Groupon is reaching and the people FB or Google is reaching: Groupon's audience is people who are actively looking to spend money, whereas most of the people who see Google or FBs ads are doing something else entirely (and would probably not notice if they just went away).