Groupon’s IPO Much Ado About Nothing?
Despite all the accounting problems and skepticism about the daily deals leader over the past four months, Groupon went public today with shares spiking by at least 40 percent.
After pricing at $20, the company increased to $28 and remained there most of the day. At the end of its first day of trading, the stock closed at $26.11, up 30.5 percent, but down from the day’s high of $31.14.
The Chicago-based company, led by the quirky CEO Andrew Mason, nailed it, especially given the rocky global economic conditions.
Mason, who has struggled to stay quiet during the company’s quiet period, kept his celebratory comments short.
In a blog post, he wrote, “Our IPO is a small milestone on our journey, but one that warrants a few words of thanks. Thanks to my cofounders—Eric Lefkofsky and Brad Keywell. Thanks to shareholders. Thanks to our employees. Thanks to our board of directors. And last, but not least, thanks to our customers and merchant partners. I feel incredibly grateful to serve as CEO of Groupon. With our IPO behind us, I couldn’t be more excited about what lies ahead.”
And, of course, he could have added: Thanks for making me a billionaire. Based on this morning’s opening, he is worth around $1.3 billion, at least on paper.
The company ended up raising $700 million after increasing the size of its initial public offering. At that size, it marks the largest IPO by a U.S. Internet company since Google raised $1.7 billion in 2004, according to Reuters.
The company sold 35 million shares in all, which represents about 5 percent of the total outstanding, making it one of the smallest sales in the U.S. over the past decade. With so few shares available, demand could keep the stock price high, but it will also be susceptible to big swings.
Even after the offering, Groupon’s three founders — Mason, Executive Chairman Lefkofsky and Director Keywell — control 58.1 percent of the voting shares.
Still, the initial public offering is just a financing event.
The hard work and public scrutiny only increases from here as the company becomes accountable to its shareholders.
But now, with Groupon’s big day out of the way, we can look forward to the public offering from Facebook games leader Zynga, which happened to report its third-quarter earnings today.