GROUPON IPO

Posted by Kris | Wednesday, November 02, 2011 | | 0 comments »



Savvy consumers get their coupon on with Groupon. Tapping into the power of collective buying, the company helps businesses attract customers by offering them a unique way to save on things to eat, see, and do in more than 500 markets worldwide. In each participating city, Groupon advertises a daily deal, typically a half-off coupon for anything from a local restaurant or retail store to a hotel or spa; if enough consumers buy the coupon online by midnight, the deal is on and the featured business can achieve a nice chunk in sales. In late 2010, the company rejected a reported $5.3 billion buyout offer from Internet search giant Google. Groupon instead filed to go public in mid-2011.

Books are expected to close on Thursday for Groupon's IPO, which has an indicative price range that values the company at $10.1 billion to $11.3 billion. So roughly around USD16-18.

But GROUPON is not able to penetrate into China successfully, since there are alot of similar china based competitor grabbing a piece of the icing cake. And there are talks that the business model is not sustainable as although there are making record revenues year by year, there are actually still losing money..lol.up to a point that the CEO fired a internal memo to all the employee extolling the company's bright future.

Some interesting facts about GROUPON from wikipedia.

Some analysts claim that Groupon operates "like" a Ponzi scheme, according to interpretation of IPO documentation, because it has publicly disclosed that it is losing approximately US$100 million per quarter, has a net negative balance of $230 million, and is using later investors' money to pay off earlier investors—which makes their operations illegal.
On August 10, 2011, Groupon updated its IPO filing, after facing scrutiny from regulators and analysts over its use of a non-standard accounting metric called Adjusted Consolidated Segment Operating Income. Critics argued that ACSOI was used by Groupon to present a misleading metric of profitability. Groupon's original IPO filing with ACSOI accounting showed a positive operating income of $60.6 million for 2010; after replacing the ACSOI metric with standard accounting metrics, Groupon's IPO filing reported an operating loss of $420 million for 2010. Analysts also criticized Groupon's decision to pay out over $940 million of the $1.12 billion in venture capital Groupon had raised before the IPO - over 84% of its venture capital raised - as cash payouts to its 3 founders and early backers, rather than into the money-losing company. Co-founder Eric Lefkofsky alone received over $300 million in early 2011, just weeks before the company filed its IPO paperwork.  The large cash payout also made Groupon technically insolvent when it filed for its IPO.
On October 21, 2011, Groupon set terms for its IPO. The company plans to list on the NASDAQ, offering 30 million shares at $16-18. The terms imply a dealsize of $510 million and a valuation of $11.2 billion.This is only 5% of the Company's Common Stock.


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