Groupon files for $750 million IPO as stocks struggle

The IPO filing suggests a $20 billion value for the company. The Dow recovers most of a 100-point loss. Worries grow about Friday's jobs report. Citigroup, Bank of America and Wells Fargo may get downgraded.

By Charley Blaine Jun 2, 2011 1:20PM
Charley BlaineUpdated: 9:15 p.m. ET

Stocks struggled all day on Thursday, but excitement ramped up over daily-deals site Groupon's $750 million initial public offering.

The company filed the papers for the offering this afternoon. The deal suggests a valuation of $20 billion for the company, even though it's still losing money.

The news came as the market struggled with worries about the economy. But sharp losses faded on a rebound in bank stocks and hopes for an aid deal for Greece.
The big concern for many investors is what Friday's important payrolls and unemployment report for May will show. Wall Street has cut its expectations for 190,000 job gains to 170,000 or less.

The Dow Jones industrials ($INDU) closed down 42 points to 12,249. Its second loss in a row came on a volatile day; the blue chips had been down nearly 100 points at 11:40 a.m. ET and slightly positive shortly after 3 p.m. The Standard & Poor's 500 Index ($INX) was off 2 points at 1,313. The Nasdaq Composite Index ($COMPX) was up 4 points to 2,773.

Article continues below.
Groupon's charge: To be as strong an IPO as LinkedIn
Groupon's IPO suggests a valuation for the company of some $20 billion and will be one of the most closely followed IPOs of the year.

The $750 million initial public offering will be led by Morgan Stanley, Goldman Sachs and Credit Suisse.

Groupon generated revenue of $644 million in the first quarter, up from $44 million a year ago. The company had revenue of $713 million for all of 2010. But the company lost $147 million. A big reason appears to be the cost of subscriptions. Ticker symbol will be GRPN.

The Groupon filing comes two weeks after LinkedIn (LNKD) went public on May 19.


LinkedIn offered shares at $45. The stock skyrocketed to as much as $122.70 and settled at about $94 on the first day. LinkedIn shares closed up 1.5% today to $78.63, giving the professional networking company a capitalization of about $7.32 billion.


The gaudiness of the Groupon offering raises again the question of whether the prices for LinkedIn, Groupon and others are too high.


What's weighing on the market
Absent a sizable reversal Friday, the major averages are headed toward their worst weekly performances since the Japanese earthquake and tsunami in March. 

The worries about the economy grew today when the Labor Department said jobless claims fell from the week before -- but not as much as expected.

The big question is how the jobs numbers and unemployment rate will work out when the Labor Department releases its May report at 8:30 a.m. ET. The consensus seems to be that the economy added 150,000 in May, with the unemployment rate holding at around 9%.

Factory orders in April fell more than expected, and retailers reported spotty sales gains for May.

Energy prices -- New York close
 
 Thur.  Wed.  Month chg.  YTD chg.
Crude oil (-CL)

$100.40  $100.29  -2.24%  9.87%
(per barrel)

 

 

 

 
Heating oil (-HO)

$3.0439  $3.0087  -0.30%  19.66%
(per gallon)

 

 

 

 
Natural gas (-NG)

$4.7940  $4.6290  2.74%  8.83%
(per mil. BTU)

 

 

 

 
Unleaded gasoline (-RB)

$2.9677

$2.9773

-5.80%

20.97%
(per gallon)

 

 

 

 
Brent crude 

$115.54  $114.53  -1.02%  21.94%
(per barrel)











Retail gasoline

$3.7840

$3.7750

0.11%

23.18%
(per gallon; AAA)












A deal on Greece helps stocks
The market's recovery this afternoon was due in part to reports that Greece will announce fresh austerity measures on Friday in an effort to restore waning confidence in its economic performance a year after securing €110 billion ($159 billion) in emergency loans, the biggest bailout in Western history. The deal comes after weeks of intense negotiations with its international creditors.

Greek Prime Minster George Papandreou, who is facing mounting domestic opposition, will present new cost-cutting policies deemed vital for the European Union and the International Monetary Fund to release a fifth cash injection of €12 billion (or $17.3 billion) to the debt-stricken country.

Energy, metals recover some of their losses
Energy and metals prices also were moving off their lows. Crude oil (-CL) in New York settled up 11 cents to $100.40 a barrel; crude had fallen to as low as $98.46. Brent crude, the benchmark North Sea oil, was up $1.10 to $115.63.

Gold (-GC) settled down $10.50 to $1,532.70 but was moving higher in electronic trading.Silver (-SI) settled off $1.492 to $36.202 an ounce. That's a 4% decline. But like gold, it was drifting higher. Copper settled down 2.2 cents to $4.0845 a pound.

Crude oil was the reason for the Dow's sudden drop to a loss of 100 points. The cause was a government report showing much larger domestic inventories than expected. That pushed Chevron (CVX) to as low as $100.36, a 2.1% decline. But the shares recovered a bit to $101.12, down 1.3%. Exxon Mobil (XOM) was off 0.9% to $81.33.

While energy shares were weakening, the market's strength, such as it was, could be found in industrial and semiconductor stocks.Construction-equipment maker Caterpillar (CAT), was the Dow leader, up 0.9% to $102.19. Caterpillar was following Joy Global (JOYG), up 5.4% to $90.51. Intel (INTC), meanwhile, was up 0.4% to $22.09,

Moody's may downgrade Bank of America, Citigroup and Wells Fargo
Financial stocks initially sagged after Moody's said it was reviewing Bank of America (BAC), Wells Fargo (WFC) and Citigroup (C) for possible downgrades.

The Moody's announcement comes as the rating agency has concluded that rules to implement the Dodd-Frank financial reform bill may mean the government won't ever save a big bank from failure.

The three banking giants have seen their stocks and bonds rise in value on the assumption big banks will be assisted in a crisis.

While letting all banks fail sounds dire, Moody's noted that any failure would be followed by an orderly liquidation of the banks to avoid disrupting financial and credit markets.

Perhaps because of that reality, Citigroup shares rose 0.9% to $40.01 after dropping to as low as $39.10. Bank of America was up 0.4% to $11.29 after dropping to as low as $11.08. Wells Fargo was up 0.8% to $27.16 after falling to as low as $26.37.

Meanwhile, Goldman Sachs (GS) shares closed down 1.3% to $134.38 after the financial giant was subpoenaed by the Manhattan District Attorney's Office, which was seeking information on the firm’s activities leading into the credit crisis.

Moody's: U.S. could be downgraded if debt limit not raised
Moody's warned that it would expect to place the U.S. government credit rating on review for a possible downgrade if the government fails to increase its debt limit.

"If the debt limit is raised and default avoided, the Aaa rating will be maintained," the rating agency said.

But it also warned that the nation's debt rating outlook will depend on the outcome of negotiations on deficit reduction. That caused bond prices to weaken and interest rates to move higher. The 10-year Treasury rose to 3.03% from Wednesday's 2.97%.

Gas nearing $4 hits retail sales
So, it was a mediocre month for retailers. Seeking Alpha noted that 15 retailers it tracks missed May sales estimates. Only eight beat the consensus numbers.

Retailers catering to the affluent did well. Saks (SKS), parent of Saks Fifth Avenue, and Nordstrom (JWN) reported better-than-expected sales. Saks rose 1.4% to $11.21. Nordstrom fell 1.3% to $44.47.

But those catering to middle-class customers did less well. Wal-Mart Stores (WMT) was the worst performer of the 30 Dow stocks, down 1.4%, and it didn't even report sales. Home Depot (HD) was off 0.9% to $35.09. Target (TGT) reported a 2.8% gain; analysts had expected 3.5%. Shares fell 1.3% to $47.95.

"When all is said and done, higher food and gasoline prices, a sluggish economy, and price-minded shoppers are taking their toll on big U.S. retailers," IHS Global Insight economist Chris Christopher said in a note to clients.

For-profit colleges catch a break
Shares across the education sector were rising after the Department of Education reached its highly anticipated ruling on gainful employment regulations.

The final ruling was less strict than expected, giving for-profit education providers a big boost. Apollo Group (APOL), operator of the University of Phoenix chain, was up 11.2% to $46.90; Corinthian Colleges (COCO) jumped 26.8% to $5.06. Education Management (EDMC) was rising 22% to $24.76, and Strayer Education (STRA) had risen 18.9% to $144.95.

Short hits from the markets -- New York close
 
 Thur.  Wed.

Month chg.

YTD chg.
Treasury yields




 





13-week Treasury bill

0.040%

0.040%

-20.00%

-66.67%
5-year Treasury note 

1.650%

1.609%

-2.25%

-18.15%
10-year Treasury note

3.030%

2.966%

-0.66%

-8.32%
30-year Treasury bond

4.251%

4.151%

0.83%

-2.54%
Currencies











U.S. Dollar Index

74.375

74.731

-0.43%

-6.20%
British pound

$1.6348

$1.6332

-0.74%

4.76%
(in U.S. $)











U.S. $ in pounds

£0.612

£0.612

0.74%

-4.54%
Euro in dollars

$1.445

$1.433

0.13%

8.02%
(in U.S. $)











U.S. $ in euros

€ 0.692

€ 0.698

-0.13%

-7.43%
U.S. $ in yen 

81.037

80.860

-0.73%

-0.41%
U.S. $ in Chinese

6.509

6.475

0.11%

-1.61%
yuan











Canada dollar

$1.022

$1.024

-1.13%

1.89%
(in U.S. $)











U.S. dollar 

$0.979

$0.977

1.15%

-1.85%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,532.70

$1,543.20

-0.27%

7.83%
(per troy ounce)

 

 





Copper (-HG)

$4.0845

$4.107

-2.23%

-8.15%
(per pound)











Silver (-SI)

$36.202

$37.694

-5.49%

17.02%
(per troy ounce)











Wheat (-ZW)

$7.6975



$7.5925

-1.60%

-3.08%
(per bushel)











Corn (-ZC)

$7.665

$7.5850

2.54%

23.13%
(per bushel)











Cotton 

$1.6424  $1.6097  3.51%  13.42%
(per pound)











Coffee 

$2.61  $2.56  -1.27%  0.0862786
(per pound)











Crude oil (-CL)

$100.40

$100.40

-2.24%

9.87%
(per barrel)












33Comments
Jun 2, 2011 3:29PM
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Lets put the blame for the poor economy where it belongs , on Greedy Wall Street Traders. They did not even give the recovery a chance before pushing oil over $100 a barrel. They have made it so expensive to live that most people do not have any extra money to pump back into the economy after paying all the bills. If oil was where it should be( between $60 and $70 a barrel) the economy would look a whole lot better and everyone could have a slice of the pie instead of a handful of Greedy Wall Street Pigs having it all.
Jun 2, 2011 3:22PM
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The market is overpriced - end of story
Jun 2, 2011 3:40PM
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BANK OF AMERICA, WELLS FARGO, CITIGROUP SHARES RISE DESPITE A DOWNGRADE BY MOODY.  WELL BLOW ME DOWN   IT'S ANOTHER MIRACLE !   ALL SMOKE AND MIRRORS!!!!!!!!!!!!  THEY ARE GOING DOWN !!!!!!!!!!!!!!!!
Jun 2, 2011 3:21PM
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I do not understand all the worry about the Stock Market!  I know every time it goes down, gas goes down, food goes down.  I hope the Stock Market would drop by 10,000 points, then maybe the price of cotton would go down and I could afford Clothing.

Thank God that Stocks gained 100 points from lows.  From the naked, starving guy pedaling his bike.

For those of you watching your 401K's; think!!!  You gave the top 1% your money to invest, like they did not have enough already.  My advise would be to pay the tax and penalties before you lose it all.  I pulled mine out and paid off my house.  I saved over 20% of it value, plus the interest saved on the mortgage.  I rather be unemployed without rent, then unemployed watching my 401K tank from a TV in the window belonging to some one else.  A DOLLAR IN THE HAND IS BETTER THAN A DOZEN ON WALL STREET.

Jun 2, 2011 2:44PM
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It doesn't surprise me that the article reads the "BANKS" help stocks rebound, because after the government bailed the banks out, the banks are hoarding the money, while Americans are losing their homes daily, and have nothing, including jobs to pay anything. You can bet though, that the Banks show "NO" mercy to any American needing help. There is story after story about families losing everything. The "banks" ARE the wealthy hording the money, and the stock market is keeping Americans poor. What a disgrace this all is!
Jun 2, 2011 3:47PM
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WTF? "Stocks rebound off their lows" Ummm they are still down 35 point plus yesterdays butt kicking of 279 points. I'd say using my regular Joe calculator the Vegas market is 314 points down for the week.
Jun 2, 2011 4:12PM
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Mirage, Most of my worker's financial gripes center around the value of their dollar diminishing, thus requiring more of them. If we desire to pay stagnant wages then we need stagnant inflation. If our businesses do not have the ability to increase profits through passing along price increases to our customers, we must change or close. Reality has its absolutes.
Jun 2, 2011 4:41PM
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I do business with a huge retailer, not walmart but the other one. They now pay 2.00 less per hour than they did 4 1/2 years ago, for certain jobs, they made it where you really cannot get benefits so I agree with miragy in that way, about the greed. When will our country not be the greedy me,me,me attitude ?
Jun 2, 2011 5:03PM
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Pretty funny watching this schitzo mess playout. Somebody farts on Wall Street and the Dow tanks, oil rises and your girlfriend is knocked up.....Cant wait til tomorrow....This is cheap entertainment!!!!  Smile

Jun 2, 2011 3:57PM
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Brent011

You're right on the mark about Greedy Wall St. Traders and most intelligent investors would agree with you. Unfortunately, those who have the political power to regulate these pigs are beholden to corporate America. We are a country of special interests and lobbyists rule the roost with public interest playing second fiddle. Hell, they're even trying to dismantle a watered down consumer protection law. The past 10 yrs. have been a day traders dream come true and there's not much on the horizon to change that status.

Jun 2, 2011 4:33PM
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Stocks only lost 42 points today. I sure wish it would have lost a lot more,... but as a positive and optimistic gloom and doomer, that will do.  Stormy cloud Open-mouthed Lightning

Jun 2, 2011 5:28PM
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Wow, only down 42 points in the end.At one point it was down 80 points. Had to be some heavy buying in the end trying to push it up but to no avail. Thats 321 points in 2 days. Their hoping Mays job report will be good Friday morning, ain't gonna happen, there will have to be 182,000 jobs added in May to make this scenario look good.Even BO is hoping for good #'s. It aint gonna happen in reality. It could sink any re-election possibilities.

Maybe if they fudge those #'s some more to generate false hope they'll spin it to push the market. But again, theres NO jobs out there in average small towns, only in large cities and you'd have to commute 140 miles aday with $4 a gallon gas. People even with degrees are out of work, tornadoes have destroyed business's and jobs, dogs and cats living together. Its chaos in biblical proportions.

Ahhhhh, the truth hurts.....But stay tuned for Fridays Market players, same time, same channel.

Jun 2, 2011 6:23PM
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As soon as the feds run out of this QE2 money the stock market is going to tank.  Most of the people that I find still in the stock market are the same people that voted for Obama.   They really think things are going great because they only see half of the picture.  My neighbor was telling me a couple of weeks ago that I was dumb for setting on the side lines.  His only focus was the S&P being up.  I told him he needs to really watch some world news to get informed 100%.  For about the last year our stock market has opened down just about everyday to end on a high note.  Why do you think that is?  Obama has Tim G. and his team purchasing stocks and bonds to pump up our market.  This has just turned into a big pyramid game.  Everyone else in the world is making money by selling their stocks while Obama keeps having the feds barrow more and more money to put into the market.  Half of what I hear out of the news is lies.  In one day this week I hear how the housing market is tanking again.  By the end of the day I hear another report saying the housing market is smelling like a rose.  I can see the pain of the people out here on the streets.  I see them looking at every bill they get at every shopping trip with amazement.  We can't keep having the feds print money because it's killing our dollars. 
Jun 2, 2011 4:42PM
avatar

How dare the employees ask for a raise for doing the exact same job, even when cost of living rises.

 

Only business owners should be increasing their profits, raising their prices for the exact same products they've always sold and take cost of living into consideration.

 

A moronic business man's handbook always comes in handy! Heil to all the moronic business people of the world!

Jun 2, 2011 2:47PM
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Capitalizm to take the banks down "next time"? Wow it is too late for that thinking. Maybe you mean this..........the next time, and the next time, and the next time..............................on and on?
Jun 2, 2011 3:14PM
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so this is the water-carrying lib media; if it isnt as bad as yesterday then it's "trying to bounce back" even if the market is still down or even?
Jun 2, 2011 3:40PM
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What a bunch of crap    Banks got bailed out  lol      dont you know everything is rosy  lol
avatar

This is better than circuses the Romans put together for their Citizens!

 

Press releases are the next best thing to comic books. Only thing is Mighty Mouse ain't coming to save the day. Spinach doesn't work no more either.

Jun 2, 2011 11:44PM
avatar

a late revision from cgt1 - he apologizes for the earlier mis-posting ..... it was a hacker into his cellphone that sent that last one (he swears) .............

 

When all was said and done (not down) we were down only 42 points, why?  Why not another 280-300 points like yesterday?  That's how these scumbags work to artificially support the market by circulating rumors like microsoft buying nokia to make their money.  They could have stayed out of the way and the market drop naturally.  Very simple people.  The jobs report comes out in the morning and the word today after the close was that good, bad or indifferent, they will be out there tomorrow hyping stocks and deluding investors to buy while they sell.  Today wasn't very important for these crooks.  Now, a mind boggling, horrific downturn  hitting jobs report would probably put a crimp (not cramp) to their well thought plans.  But, lets face it, with a beer-drinking, anti-societal, southern baptist, incompetent pos former president now tucked away safely in texas when he dodged the military service and never held a job himself that daddy bush didn't give him, and that had no clue on how to create jobs and run a country (only how to ruin one),  the odds are that all the change and fine ideas that the current president has (my homie barack) the good wishes will not materialize because of what bush did to de-rail the country.  It will be another dull, average at best report that will keep destroying our country as a result of this inexcusable mistake we made by putting another cowboy in the whitehouse like that.  he has been doing much better secluded on his ranch in texas where they can keep him away from sharp instruments and anything financial or related to foreign affairs.  word has it that he can't keep a mexican maid or ranch hand around for longer than a week because that laugh drives them to run back south.  Oh well, we will find out soon enough.

Jun 2, 2011 10:07PM
avatar
The lack of knowlage of the general public scars me truthfully. The day traders are the blame for these radical swings in the market. The dow drops if oboma get a hang nail. Think people
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