Groupon shares soar after $700 million IPO

Nov 04, 2011 by Charlotte Raab
The Groupon logo is seen in the company's international headquarters in June 2011 in Chicago, Illinois. Groupon shares soared on Wall Street on Friday after the online daily deals sensation raised $700 million in the biggest initial public offering by an Internet company since Google.

Groupon shares soared on Wall Street on Friday after the online daily deals sensation raised $700 million in the biggest initial public offering by an Internet company since Google.

Groupon shares were listed on the Nasdaq at $20 a share and rose as high as $31.14 in early trading before settling around $26.50, a gain of more than 30 percent.

Groupon, which is trading under the symbol "GRPN," raised $700 million with the largest IPO by an since , which reaped $1.7 billion when it went public in August 2004.

Groupon, which rejected a $6 billion takeover offer from Google a year ago, sold 35 million shares of stock at $20 per share, higher than the initial $16 to $18 price range.

Groupon's debut is being closely watched by technology-stock hungry investors eagerly awaiting IPOs by giant Zynga and titan .

Career-oriented social network went public in May at $45 a share and was trading around $79 on Friday.

Pandora has been less successful and was trading around $15 on Friday, below its listing price of $16.

Groupon has enjoyed phenomenal growth since its founding in 2008 -- going from 37 employees in June 2009 to more than 10,400 presently -- but questions have been raised about the company's business model and accounting methods.

Renaissance Capital, which specializes in IPOs, said Groupon should attract initial investor interest because of the relatively limited number of shares it is offering -- just five percent of the company.

"However, Groupon's long term success ultimately hinges on the economics of the model, which remain unproven," Renaissance Capital said.

Virginie Lazes of investment bank Bryan, Garnier & Co said companies generally place 15 percent to 20 percent of their shares in an IPO.

"This one has been structured to create an immediate hit," Lazes told AFP.

Despite its spectacular growth Groupon is not yet profitable.

"Regardless of the rapid growth Groupon has used to infatuate potential investors, the company still has yet to turn a profit," Renaissance Capital noted. "Future earnings will largely depend on Groupon's ability to reduce marketing expenses effectively while maintaining customer growth.

"Additionally, it must withstand rapidly increasing competition in the space, including from large companies such as Google and Amazon," it said.

The Chicago-based Groupon is present in 175 North American markets and 45 countries and has 142.9 million subscribers. It sold 33 million "Groupons," or discount coupons, in the third quarter of the year.

In a filing with the US Securities and Exchange Commission, Groupon reported a net loss of $308.1 million for the first nine months of the year on revenue that soared to $1.1 billion from $140.7 million in the same period a year ago.

Explore further: Why the Sony hack isn't big news in Japan

add to favorites email to friend print save as pdf

Related Stories

Groupon files for IPO, seeks to raise $750 million

Jun 02, 2011

Rapidly growing online coupon seller Groupon Inc. is offering its most tantalizing deal yet - an initial public offering of stock likely to intensify a debate about whether an investment bubble is forming ...

Top Groupon exec jumps back to Google

Sep 24, 2011

Groupon revealed that the startup's chief operating officer was leaving after just five months for a job at her former employer -- Google.

Groupon's public valuation close to $20 bln: report

Apr 15, 2011

US coupon deals website Groupon will likely pick Goldman Sachs Group and Morgan Stanley to be principal underwriters for its public offering later in the year, valuing the company at up to $20 billion, the ...

Recommended for you

Why the Sony hack isn't big news in Japan

3 hours ago

Japan's biggest newspaper, Yomiuri Shimbun, featured a story about Sony Corp. on its website Friday. It wasn't about hacking. It was about the company's struggling tablet business.

Sony faces 4th ex-employee lawsuit over hack

8 hours ago

A former director of technology for Sony Pictures Entertainment has sued the company over the data breach that resulted in the online posting of his private financial and personal information.

Sony tells AFP it still plans movie release

9 hours ago

Sony Pictures boss Michael Lynton denied Friday the Hollywood studio has "caved" by canceling the release of "The Interview," and said it still hoped to release the controversial film.

2012 movie massacre hung over 'Interview' decision

23 hours ago

When a group claiming credit for the hacking of Sony Pictures Entertainment threated violence against theaters showing "The Interview" earlier this week, the fate of the movie's big-screen life was all but ...

Clooney slams skittish Hollywood after Sony hack

Dec 19, 2014

Film star George Clooney slammed the Hollywood movie industry for failing to stand up against the cyber threats that prompted Sony Pictures to cancel release of the movie "The Interview."

User comments : 1

Adjust slider to filter visible comments by rank

Display comments: newest first

Vendicar_Decarian
not rated yet Nov 04, 2011
How sad isn't it that the American people aren't allowed to participate in these IPO's and that they go to preferred traders, politicians and other members of the privileged class.

Why do Americans accept this corruption?

Shouldn't IPO shares be distributed fairly by lottery?

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.