Groupon Inc. jumped as much as 56 percent in its trading debut after the online-coupon company raised $700 million in an initial public offering that limited the amount of shares typically available to investors.
The shares of the Chicago-based company, listed under the symbol GRPN, climbed $7.22, or 36 percent, to $27.22 at 12:07 p.m. New York time in Nasdaq Stock Market trading, after surging to $31.14. Yesterday, Groupon sold 35 million shares at $20 each, the biggest IPO by a U.S. Internet company since Google Inc. (GOOG) raised $1.9 billion in its 2004 initial offering.
Groupons IPO attracted interest even as internal missteps, unprofitability and an expensive valuation compared with its peers made some investors skeptical. Groupon is now more expensive than Microsoft Corp. or Amazon.com Inc. (AMZN), based on projected 2012 sales.
The market continues to have high expectations of growth for Groupon, said Larry Levine, Chicago-based managing director at RSM McGladrey Inc. If you miss your growth estimates, the stock price will decline precipitously.
Todays trading gave Groupon a market capitalization of as much as $20 billion, or almost double the value the company sought in the offering. Groupon had discussed an IPO valuation of as much as $25 billion with bankers, people said this year, and it rejected a buyout offer from Google in 2010 that would have valued it at $6 billion.
Groupon had initially offered 30 million shares for $16 to $18 apiece, or as much as $540 million. While the company said in its prospectus that it wont need to use the proceeds from the IPO for at least a year and has no urgent cash needs, the company owed almost twice as much to merchants at the end of September as it held in cash. Marketing costs rose 37 percent in the latest quarter, four times as quickly as its cash pile.
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Pen. 11 04, 2011 7:35 pm