• Bloomberg, Monday, December 6, 2010 2:12 PM

Late last week, as you must have heard by now, Groupon rejected Google's heady takeover bid, and Bloomberg thinks it knows why. Chiefly, the social deal leader is "betting it can keep increasing its valuation after walking away from a deep-pocketed suitor." As the story of Yahoo demonstrates, it's a strategy fraught with risk, but -- as the story of Facebook shows -- great potential, too.

"It is very common for all executives -- entrepreneurs or executives of public companies, to drink their own Kool-Aid and believe their own hype," Lou Kerner, a social-media analyst at Wedbush Securities tells Bloomberg. "When everything is going up and to the right, it's hard to have appreciation for the risks that are apparent in any business." Next week, the Chicago-based provider of online coupons is expected to decide whether the time is right for an Initial Public Offering. "Life is all about timing and it's hard to pick the perfect point to sell," Kerner added. "Sometimes it's better to sell too early than too late."

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