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Wallets ready? Groupon to IPO at $25B

The daily deal giant is reportedly in talks about an IPO now worth $25B, $10B higher than before

Financial trends and news by Faith Merino
March 17, 2011 | Comments
Short URL: http://vator.tv/n/1849

Never one to settle into a comfortably predictable routine, Groupon is stirring things up again with reported talks of a $25 billion IPO

Really?

Yes. 

The reports come from sources who spoke off the record and said that Groupon's IPO could happen this year and it will likely go for anything between $15 billion and $25 billion. Preferably handed over in a giant bag with a big dollar sign on it.

The daily deals company, which will be three years old this year, isn't slowing down despite advertising drama and a recent slew of lawsuits over inconvenient expiration dates. Groupon recently touched down in South Korea, and last month it teamed up with Tencent to launch its new Chinese branch, GaoPeng, bringing its total subscriber base to an awe-inspiring 70 million--fully 60% more than what it had when Google offered to buy Groupon for $6 billion only three months ago. 

That stands repeating: Groupon's valuation has tripled in three months. Even more amazing--less than one year ago, Groupon was valued at $1.3 billion after it raised $135 million--which means the company's valuation has skyrocketed 20x in less than one year.

Following Google's buyout offer, Groupon raised nearly $1 billion in financing to spur on its international expansion--which has been driving at breakneck speed. Since December, Groupon has launched in nine more countries (bringing its total to 45) and now employs some 4,000 people, up from roughly 3,000 in December. Groupon's $950 million financing round valued it at $4.75 billion.

In January, Groupon was rumored to be in talks with Goldman Sachs and Morgan Stanley about a possible Spring IPO at a $15 billion valuation. 

Of course, all of this valuation talk has many wondering about the possibility of a bubble, and for good reason, considering the fact that Groupon essentially created a new industry--now peppered with hordes of clones--and no one knows how far it can go, or when it will burn out. 

But then again, look at Amazon. The company's success is almost entirely built upon the fact that it doesn't collect sales taxes, thereby enabling it to offer products for dirt cheap. Amazon went public in 1997 and 14 years later, it's still going strong (excepting the backlash from states facing multi-billion dollar deficits and need that sales tax NOW). All it took was a simple tweak of the traditional commerce model, which is how Groupon has rocketed to the top, so if Amazon's story is any indicator of Groupon's future, the daily deals company has sunny days ahead. 

Image source: flickr.com


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