Groupon Sets Target Range for Shares for Upcoming IPO

Published by: Kelly Curtis on 21st Oct 2011 | View all blogs by Kelly Curtis
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Groupon Sets Target Range for Shares for Upcoming IPO

Daily deals site Groupon on Friday unveiled the details for its initial public offering in a filing with the Securities and Exchange Commission.  The company has reduced its goal for the IPO by 28 percent, according to the filing, and is now hoping to raise $540 million in the long-anticipated offering.  The company said it will offer 30 million shares in the deal, hoping to receive between $16 and $18 per share.  According to its original IPO filings, which it filed in June, the company had previously hoped to raise $750 million.

In the four months since it first announced its intentions to go public, Groupon has been the target of abundant criticism over an accounting method the company used to calculate its earnings.  That controversy, combined with significant market volatility, forced the company to delay its IPO, filing several amendments to its original filing over the course of the summer.  The last amendment, filed in September, ditched the controversial accounting method for a more traditional calculation of revenue, cutting it in half to $688 million for the first half of the year.

If Groupon's shares are picked up at the top end of its target range, $18 a share, that would make Groupon worth about $11.4 billion.  In the 12 months ended September 30th, the company brought in $1.3 billion in revenue, although it posted a net loss for that period of $574 million due to aggressive marketing, calling into question the company's ability to turn a profit.  Despite the company having never turned a profit, however, investors are clamoring to get their hands on a stake in the company.

The reason for the excitement about a Groupon IPO is simple.  Previous tech startups going public have had tremendous success in their IPOs, including professional social networking site LinkedIn, whose shares more than doubled in the first day of trading when it launched an IPO earlier this year.  Now that Groupon has officially declared a target range, shares should begin trading within the next few weeks.  The company's shares will be traded on the Nasdaq under the ticker symbol GRPN.

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