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Groupon's IPO is the largest for an Internet company since Google in 2004, which raised $1.7 billion

Back in September, Groupon delayed its initial public offering due to SEC questioning and the dismal outlook of developed economies' stock markets. Now, Groupon has raised $700 million after increasing its IPO size to become the largest for an internet company since Google in 2004.

Deal-of-the-day website Groupon increased the size of its IPO by 5 million shares to 35 million total, with each priced at $20 when they were originally around $16 to $18. Groupon is now valued at about $12.8 billion.

Groupon's public float represents just over 5 percent of the company, and has helped increase price and demand. According to analysts, it will also support Groupon's share price Friday when it starts trading under GRPN on the NASDAQ.

However, some worry that Groupon will need to spend more in order to drive subscriber growth, and won't be able to compete with larger players like Amazon and Google. In addition, there are accounting-related concerns due to Groupon's altering of its IPO filings in order to "change the way it accounted for revenue."

Groupon CEO Andrew Mason and his team spent nearly two weeks on the road meeting with investors to address such issues. The long term is a concern for most in regards to growth and revenue.

"The post-IPO investor will be taking a risk on this deal," said Josef Schuster, founder of IPO research and investment house IPOX Schuster. "It's maybe a good trade for a day trader, in and out in a single day, but I don't want to be in it for the long run."

According to Reuters, Groupon cut its valuation by nearly half to make the deal.

If underwriters ended up buying just over 5 million more Groupon shares in the IPO, the company will raise more than $800 million.

"[Groupon] is a company with permission to market to 150 million consumers daily," said Boyan Josic, chief executive at Daily Deal Media. "No other company in the world has ever had that type of reach. Investors who truly understand this business model and the position that Groupon has in this market are buying."

Groupon, which fell under SEC questioning due to an internal memo sent by Mason in August that "lashed out" at company critics and discussed August revenue growth before the planned IPO, is asking more than twice what Google offered to pay in order to buy the company last year with its $12.8 billion price tag now.

Groupon's IPO could set a trend for others, such as Zynga, which filed an IPO in June and is expected to start trading this month.

Sources: CNN, Reuters

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By Samus on 11/4/2011 1:51:17 PM , Rating: 3
This is not going to end well...

RE: Yikes....
By therealnickdanger on 11/4/2011 2:03:33 PM , Rating: 2
At least I'll get paid.

RE: Yikes....
By Reclaimer77 on 11/4/2011 3:54:59 PM , Rating: 1
Yup. Smoke em if you got em!!!

RE: Yikes....
By martin5000 on 11/5/2011 12:10:29 PM , Rating: 1
A business model that is easy to copy and relies on your customers (the businesses making the offers) losing money. What could possibly go wrong?

I think investors think "OMG OMG this is the new google/facebook!!!!" before actually analysing if its actually a sensible business.

RE: Yikes....
By NovoRei on 11/7/2011 1:42:03 PM , Rating: 2
Bubbles, bubbles everywhere.

Give me a reason to buy this stock other than going into the hype and selling before it explodes.

Groupon has a license to spam.
By EricMartello on 11/6/2011 4:49:09 PM , Rating: 2
If you think about it, that's all that Groupon really is - a spammer who doesn't need to worry about being blacklisted. They're basically getting custom "affiliate offers" from businesses which they then plug on their website but primarily via email. They don't even send you a validation link to confirm that the email you enter is legit, nor do they use captcha, so it is possible that someone could sign up with a bunch of "spam trap" emails and get them shut down...or at least put a dent in their operations.

top ticker
By Shadowmaster625 on 11/7/2011 1:54:33 PM , Rating: 2
700 million in total crackheaded madness. Please if you are a fool put your money in here. Should be trading down 70% within a year. See NFLX for a sample of future returns.

“We do believe we have a moral responsibility to keep porn off the iPhone.” -- Steve Jobs
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