December 11, 2017

Groupon Prices IPO at $16 to $18 a Share

Groupon, the Chicago based company that offers subscribers daily deals at restaurants and stores, is set to go public on November 3rd.


Offering 30 million shares at a range of $16 to $18, Groupon could potentially raise $510 million, with a company valuation of as much as $11.4 billion. If demand exceeds the number of shares initially offered, an additional 4.5 million shares may be made available by the underwriters.

Groupon initially filed to raise $750 million, but concerns about certain accounting practices and ongoing sustainability caused it to scale back.  Even though third quarter losses were $1.7 million, this was less than originally expected, and those losses occurred mainly in international business. North American business saw a profit, with earnings of $18.8 million.

Groupon has 149.2 million subscribers worldwide, seven times more than last year. Of those subscribers, approximately 29.5 million have purchased at least one deal from the site as of the 3rd quarter.

Even though the company has grown substantially larger recently, net revenue has slowed, growing only 9.6 percent in the last quarter to 430.2 million. That being said, Groupon says that it is still getting new subscribers.

This news comes as Groupon prepares to go on a two-week roadshow, hoping to attract potential investors. While looking to generate great interest in the IPO, Groupon is also aware that there may be tough questions from investors. Today’s prospectus hopes to quell any doubts about its sustainability, noting that the number of coupons sold per subscriber is up 27 percent from year to year, to 4.2. At the same time, the average revenue generated per coupon has grown approximately 31% over the same period last year.

But as Groupon tries to attract new subscribers by expanding the type of deals it offers, to include ticketed events and travel offers, these kinds of products bring in a lower profit margin per deal. Even though the yearly revenue has increased, the actual revenue per subscriber dropped in the third quarter to $3.3, a drop of 15 percent.

A big concern are marketing costs. The first 3 quarters of this year saw Groupon spending $613 million trying to attract new subscribers, compared to under $90 million in the first 3 quarters of 2010. With these concerns in mind, Groupon has reduced its marketing budget, with chief executive officer Andrew Mason pledging to further cut back expenses in the future.

Another issue that Groupon seeks to clarify is the notion of “selling stockholders”. The company has noted that its shareholders will not be offering any shares in the IPO. Recently, the founders of the company and their investors have sold a large amount of stocks, raising $950 million. $810 million of this amount went to current shareholders.

Groupon will trade on NASDAQ, using the ticker GRPN. The main Underwriters are Morgan Stanley, Goldman Sachs and Credit Suisse.

Related Links:

Dealbook Article

Groupon’s S-1 Filing at SEC

Techcrunch Article

BusinessWeek Article on Groupon IPO

Groupon Files For IPO

“Groupon, the social buying site decided to go public and filed with the SEC on 2nd June 2011, to raise about $3 billion in an initial public offering. The company grew at an unprecedented pace after its launch two years ago, with sales increasing by about 2,241% between 2009 and 2010. Social Internet companies have been going public with many opting for IPO’s with Facebook raising $1.5 billion, the online music service Pandora planning to raise as much as $141.6 million, while the gaming company Zygna planning to file for an offering.


Groupon Files For IPO

Launched in November 2008, Groupon offers daily deals on the best stuff to do, see, eat, and buy in about 43 countries. The company has its presence in US, North America, Europe, Latin America, Asia, and around the world. It started out of a website called The Point, launched in November 2007 which allowed users to start a campaign asking people to donate or do something as a group.

Groupon turned down a $6 billion buyout offer from Google last year. With this $3 billion IPO, Groupon is likely to surpass the value of Google which had a valuation of $23 billion at its market debut. Despite skyrocketing sales, Groupon is yet to start earning as they incurred losses to the tune of $413 million in 2010. The company claiming a subscriber base of about 83.1 million had first-quarter revenue of $644.7 million, still lost money last quarter with losses amounting to $113.891. The company added it sold 28.1 million Groupons in the first quarter and had 56,781 merchants in its marketplace.

The daily-deal market leader, Groupon, faces mounting competition from LivingSocial, Google and Facebook. LivingSocial, one of its rivals is planning to raise as much as $400 in funds. Groupon plans to trade under the ticker symbol GRPN and investment banks Morgan Stanley, Goldman Sachs and Credit Suisse have been tapped to be the IPO’s bookrunners.

The current trend of investing in new technology stocks has got investors all excited about such investments. Doubts are being raised whether this bubble will burst as many of these companies are finding it difficult to earn profits. Groupon’s chief executive, Andrew D. Mason has cautioned investors to be realistic about their profit expectations in a letter to prospective shareholders.”

Learn more, click here:

Dealbook

Groupon Said to Discuss IPO Valuation of Up to $25 Billion

Groupon files to raise $750 million in IPO

Groupon Spells Out IPO Plans; Brought in $645M 1Q Revenue

INFOGRAPHIC: How Groupon Stacks Up Against Facebook Deals, Google Offers