At its core, Groupon’s U.S. business is a receivables factoring business. They give loans to small businesses at a very steep rate (the price of the discount plus Groupon’s commission). Groupon is essentially a sub-prime lender that does zero risk assessment.

From Rocky Agrawal in his VentureBeat opinion piece, Why Groupon is poised for collapse.

I’ve talked before about how important it is for managers to understand the sector in which they’re really operating. This is no different for consumers looking to game a system, or entrepreneurs aiming to invent an entirely new one.

[Note: if you read the Rocky Agrawal piece, factor that he seems to have a philosophical opposition to group buying. Much of what he discusses in the article can be fixed via business model adjustments. Groupon is a work-in-progress, but it’s also a stock I would never buy … unless I intended to short it.]