Why Groupon Is Over and Facebook And Twitter Should Follow

By Peter Cohan Forbes:

Investors are giving up on Groupon (GRPN) and they’re scrambling for the exits on Facebook (FB) too. Since Twitter is not publicly traded, they can’t get out of that one as quickly.

But social media attracts consumers because of dopamine — and like any drug — those consumers need a bigger dose to get the same effect. Social media’s inability to deliver that is at the root of what makes it hard for it to grow into its lofty valuations.  Not only that, but it’s failing to come up with compelling ways to earn a return on spending to turn those consumers into repeat customers.

The list of investors getting out of Groupon shares contains prominent names.

They include Andreessen Horowitz, Hedge fund Maverick Capital Ltd., and Fidelity Management & Research Co, according to the Wall Street Journal. Others like Kleiner Perkins Caufield & Byers and Morgan Stanley (MS) are bullish on Groupon, reports the Journal.

Groupon and the whole daily deal business are under pressure because so many participants offer a money-losing proposition to merchants… Read more

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