Groupon IPO Will Be Hottest In Years
Daily coupon company Groupon, which is widely believed to be the fastest growing company in the world, announced on Thursday that it is going to be going public. The IPO should be one of the hottest issues ever to hit the markets, and if LinkedIn's (NYSE: LNKD) recent IPO is any indicator, Groupon's debut will likely be met by overwhelming hype and even pandemonium.
Groupon's filing did not disclose how much money it expects to raise from its IPO, but early indications suggest that it will be between $750 million and $1 billion at a valuation of $20 billion. The likely small size of the deal versus the total value of the company could potentially push the share price into the stratosphere due to huge demand meeting limited supply - similar to what occurred on LinkedIn's first day of trading.
The company's filing today gives investors a peak into the growth engine that is Groupon. In the first quarter of 2011, the company reported revenue of $644.7 million. This compares to total 2009 revenue of $30.47 million and total 2010 revenue of $713.4 million. Despite the unbelievable revenue growth, Groupon is still not likely to become profitable in the near future. The company recorded a net loss of $389.6 million in fiscal 2010.
Groupon featured merchants have grown from 212 in the second quarter of 2009 to 56,781 in the first quarter of 2011. Its subscriber base has increased from 152,203 on June 30, 2009 to 83.1 million on March 31, 2011. The company now has 7,107 employees.
According to the filing, Groupon expects its will increase substantially in the foreseeable future as we continue to invest to increase our subscriber base, increase the number and variety of deals we offer each day, expand our marketing channels, expand our operations, hire additional employees and develop our technology platform.”
The underwriters for the upcoming IPO are going to be Morgan Stanley (NYSE: MS) Goldman Sachs (NYSE: GS) and Credit Suisse (NYSE: CS). The stock will trade under the ticker symbol GRPN, although it is unclear if the company will be listing on the NYSE or NASDAQ.
Groupon made headlines last December when it turned down a $6 billion buyout from Google (NASDAQ: GOOG). At the time, the company's decision seemed outrageous, but if reports are accurate, Groupon may be valued at as much as $20 billion right now.
Groupon is likely going to be the hottest IPO since some of the deals that were done during the Dot Com bubble. The daily deal company has generated more hype and attention than any other private firm not named Facebook. The internet is sizzling once again as witnessed by recent IPOs such as LinkedIn (NYSE: LNKD), Youku.com (NASDAQ: YOKU), E Commerce China Dangdang (NYSE: DANG), Renren (NYSE: RENN) and Yandex NC (NASDAQ: YNDX). All of these companies were able to raise substantial amounts of money and comparing them to Groupon is like comparing the Pittsburgh Steelers to your local high school football powerhouse.
Many commentators have pointed to the LinkedIn (LNKD) deal as being a sign of a serious bubble in social media companies. LNKD's valuation is so far out of whack from the observable fundamentals that the warning cries may well be justified. What matters in the short-term, however, is hype and a great story - two ingredients that Groupon has in spades. For this reason, expect the market to greet GRPN's debut with a wall of cash that may make the recent moves in LNKD look tame and harken back memories of 1999.
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