Groupon files to go public

The daily deals site wants to raise $750 million in an IPO, trading under the symbol 'GRPN.'

By Kim Peterson Jun 2, 2011 4:09PM
Call it a tech bubble, call it a frenzy or call it a series of overhyped valuations. It just got bigger now that Groupon is going public.

The site, which offers daily discounts at local shops and restaurants, filed plans today to raise $750 million in an initial public offering, creating a new wave of anticipation among investors who want to cash in on social media.

Groupon had been on this path ever since it rejected a $6 billion offer from Google (GOOG) last December. The company pioneered the daily-deals business, and was rewarded by seeing a rash of competitors and clones. Google, Facebook, LivingSocial and Amazon (AMZN) have all jumped into the pool, offering customers discounts at hair salons, photography studios, restaurants and other stores.

Post continues after this video about Groupon's IPO filing:
The business is paying off handsomely for Groupon, which said its revenue exploded in the first quarter to $644.7 million from $44.2 million a year earlier, Bloomberg reports. But the company had a $113.9 million net loss in the quarter, in part because it spent $208 million on marketing.

Groupon's subscriber numbers are also staggering, at 83.1 million in the first quarter from 3.4 million a year earlier.

Groupon requested to trade under the "GRPN" ticker, and will use Morgan Stanley (MS), Goldman Sachs (GS) and Credit Suisse as its underwriters.

Why go public now? Two reasons. The recent IPO of LinkedIn (LNKD) showed just how hungry investors are to jump on to the social media/technology bubble. It's a good time.

But more importantly, Groupon really needs the money. Some well-heeled competitors are just entering the business, and Groupon needs to stay ahead of them with a big expansion into new cities and countries.

While Groupon initially focused on deals with local vendors in cities, it has been expanding into nationwide bargains. Today, for example, the site is offering a $10 coupon that can be used to buy $20 worth of merchandise at Old Navy, owned by Gap (GPS). By the afternoon, 137,000 people had bought the deal, with nine hours left to go.
8Comments
Jun 2, 2011 5:06PM
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I would be concerned...

Facebook was a concept....LinkIn is a tool...........Groupon seems to be no more than an aggregator...

 

They are offering the IPO because of the need for capital as competition begins to close the gap, not a good way to start. If they are that concerned about being overtaken by the competition in this short period of time (a bit over a year), how long can they be the dominant player. This might be a short and bumpy ride.

Jun 2, 2011 5:41PM
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As a business owner, I have found Groupon to only market to and bring a business customers who are bargain hounds. They rarely come back as a regular customer. This type of customer is not one most businesses try to attract. They move on to the next Bargain. Groupon won't last long because a lot of businesses found them more hurtful that helpful.  Do not invest.
Jun 2, 2011 6:14PM
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Unfortunately Groupon had a great idea that is easily copied. When facing growing competition from the likes of Amazon and LivingSocial (Amazon a major investor) Groupon made the foolish mistake of turning down Google's $6 billion offer. Groupon had to know Google wouldn't go away, they would become a competitor. Yet another reason to collect $6 billion and get the backing of one of the few companies that has the know-how and deep pockets to fight the competition.

 

I won't invest in a company where the CEO has all of the above to consider and turns down a $6 billion buyout. That's a CEO who doesn't see the big picture. Unfortunately I think a Groupon IPO will be negative (under open price) by the end of day one.

 

As for jeff kasman, the Google retiree, its being pragmatic not negative. Our views are based on facts like a CEO passing up major money while facing stiff competition for an easily duplicated niche market. Jeff, please put your money where your mouth is and sink your Google fortune into Groupon. The world needs a good laugh.

Jun 2, 2011 6:35PM
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Jeff Kasman,

Message boards are here for one reason. They put them here to grab opinions. If you don't like what you read ignore it, isn't that the more adult thing to do.

Just because a company sounds good doesn't make it a good sound investment. Just because Morgan Stanley or  Goldman Sachs is involved doesn't make it a better chance of success. Didn't Goldman Sachs bilk how many investors in the crash.

Everyone's best investment is grabbing the knowledge and doing there homework and making the choice from sound finance and earnings statements. Groupon's best choice would have been sell for $6 billion and let a company that has been in the game for sometime spin it off and build it for everyone not major cities. There are other folks in the world then just the state capitals and major business hubs.

They need a solid business and some including myself don't feel they have a solid base to grow on because they are young. The competition is brutal in the markets they are entering and some of the competition can under cut there discounts even sharper then groupon will be able to handle being so new to the game.

Jun 2, 2011 6:24PM
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Groupon will be a quick buck turner for initial investors but I think for the long term investment the investment is very bleak. They are only focused in Major cities and some of these businesses participating may not have online catalogs or websites to purchase from.

If you are going to invest I would invest on the short sell because it will drop faster then it will go up. With linkdin already down about 17% from it's ipo I don't think value shopping online through a company like this will be a very robust business or investment.

They would be better served just selling for the $6 billion to google and let them operate the whole deal and take that money and build another project. Some projects are only good to make a money through the selling of the idea.


Jun 2, 2011 5:19PM
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Sounds like we are going to experience another tech bubble popping in the near future just like the dot-com boom a while back. All these billion dollar, hollow-valued companies are going to in for a shocker IMO.
Jun 2, 2011 5:16PM
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Linked in opened at $94 and now trading about $78. Don't see Groupon or linkedin as a buy and hold.
Jun 2, 2011 5:58PM
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If you have nothing to say positive then say nothing at all. I bought google when if first opened six months later I retired.

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