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

Angie’s List Files For IPO

Angie’s List, an Indianapolis-based consumer website that provides consumer reviews of local service companies such as contractors and doctors, filed an initial public offering on Thursday. The company is looking to raise $75 million.


Founded in 1995 by Angie Hicks and Bill Oesterie, it has about 820,00 subscribers in 170 markets across the United States, posting an average of 40,000 reviews a month. The website works on a registered subscription basis, ensuring only unbiased reviews.

Angie’s List is not yet seeing a profit: even though Revenue increased by 40.5 percent to $38.6 million in the first half of 2011, it had a loss of $25.8 million. With marketing expenses on the rise, the filing states that the company intends to increase advertising spending, using money raised to “fund our advertising strategy to drive membership growth and for general corporate purposed, including working capital.”

The lead underwriter of the IPO will be Bank of America Merrill Lynch, Also participating are Allen & Company, Stifel Nicolaus Weisel, RBC Capital Markets, Janney Montgomery Scott, Oppenheimer & Co, ThinkEquity and CODE Advisors.

Read More:

Techcrunch Article

Dealbook Article

SEC S-1 Filing

Angie’s List