June 3, 2011

Groupon Files For IPO

Deal-of-the-day website Groupon filed for an initial public offering (IPO) on Thursday seeking to raise upwards of $750 million, giving shareholders a chance to invest in the fast-growing company.

However, Chicago-based Groupon, which will trade under the symbol "GRPN," did not provide the number of shares being offered or provide a date for the listing on Wall Street.

Groupon, which has benefited from exceptional growth with its online coupon-deals business, reported a net loss $102.7 million in the first quarter of 2011 on revenue of $644.7 million. The company reported revenue of $713.4 million in 2010, and $30.5 million in 2009.

Groupon reported that it spent $179.9 million on online marketing in the first three months of 2011 and it will continue to spend more and more to acquire additional subscribers.

Other Internet companies including LinkedIn and China's Renren Inc. have had strong IPO premieres in recent months, causing speculation that other companies would follow their lead.

"As with any business in a 30-month-old industry, the path to success will have twists and turns, moments of brilliance and other moments of sheer stupidity," Groupon Chief Executive Andrew Mason said in a letter to potential stockholders.

Groupon was founded in November 2008 by Mason, a young and brash entrepreneur who was majoring in music at Northwestern University. Groupon takes a commission from merchants that provide services for the company, which offers deals to members when a certain number of people sign up for a particular deal.

"Groupon's had a lot of success in its early stages, but the model of group buying has limited barriers to entry and it's being replicated," BCG Partners analyst Colin Gillis told Reuters, pointing to up-and-coming competitors like LivingSocial.

While Groupon leads the market in daily-deals services, it faces increasing competition from hundreds of other upstart rivals as well.

An anonymous source told Reuters in April that Groupon could raise as much as $1 billion in the IPO, which could value the site at $15 billion to $20 billion.

Groupon said it had 83.1 million subscribers to its online discounts as of March 31 and employed more than 7,000 people. Groupon expanded from five North American markets in June 2009 to 175 NA markets and 43 countries as of March 31.

Groupon featured deals from 56,781 merchants in the first quarter of 2011 and sold 28.1 million coupons.

In a letter accompanying the IPO filing, Mason said his company is "unusual and we like it that way."

"Life is too short to be a boring company," he said. "We seek to create experiences for our customers that make today different enough from yesterday to justify getting out of bed."

On Wednesday, Groupon and online travel site Expedia announced that they were teaming up to provide travel offers.

Groupon's IPO is being handled by Morgan Stanley, Goldman Sachs Group Inc., and Credit Suisse Group AG, according to the filing.

Wall Street has taken much interest in Groupon since December, when the company decided to consider an IPO rather than accept a $6 billion acquisition from Google Inc. 


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