Groupon Could Challenge Google's Record IPO

jbrodkin writes "Months after spurning Google's $6 billion takeover bid, Groupon may topple Google's IPO record with an initial public offering worth $25 billion. Google went public in 2004 with a $24.6 billion valuation and Groupon seems to be on the verge of an IPO worth even more, Dow Jones VentureSource says. Even if Groupon doesn't break Google's record, it seems likely to become only the fifth venture-backed company to achieve a $10 billion valuation at the time of its IPO."

Comments

Trying to Blow Up a New Bubble

[MarkvW]

Wall St. can't keep itself from trying to blow up investment bubbles.
There's a sucker born every minute (and then the taxpayers bail the investment banks out).

Re:Groupon

[MetalliQaZ]

Actually users SPEND money. When advertisers say that you "save" money by taking advantage of a deal, they are altering reality. Saving money is the opposite of buying.

Still, when used responsibly, it IS a win-win-win. I have used it to great effect.

-d

Re:Welcome to 1999

[MetalliQaZ]

I wouldn't write Groupon off as a bubble stock. They actually make money, which means they can be legitimately valued. The hysteria in 1999 was in companies that had no proven revenue stream whatsoever.

How is it worth anything?

[Anonymous Coward]

Groupon makes a lot of money. Groupon also has a massive amount of debt. They secured about a billion dollars in funding during a recent 'investment round'.

We are talking about a billion dollars in funding to run a website that requires no novel technology, has no valuable intellectual property, and doesn't have much of a competitive advantage. There isn't anything stopping other companies and people from creating more Groupon clones (as is obviously evidenced by competitors like LivingSocial and Google's upcoming daily deals site).

The VCs must be really desperate for a success story, considering all the 'most innovative companies' coming out of silicon valley have no business model. They want to make money off of one of the pseudo-profitable organizations while they can. Welcome to doctom bubble 2.0.

Re:How is it worth anything?

[sycorob]

Auctions need an economy of scale to work at all, though. If there aren't people selling there, there's no point going there to buy. If nobody's buying anything, there's no point listing it for sale there. GrouponClone needs enough people to sell, say, 100 coupons to start, and then you can grow from there. You could just run it a little leaner, and charge the restaurant slight less. It's really easy to copy. In some areas of the country, like New York, LivingSocial has way more mindshare than Groupon does, and they started later.

There are probably hundreds of developers and business people out there that just heard about this potential IPO and said "how hard can it be to make that?" Groupon should cash in now, before they get their lunch eaten by 1000 me-too competitors.

Re:Can someone explain the appeal here?

[Anonymous Coward]

You really don't understand it then.

All of the coupons require you to buy in. They aren't coupons at all but rather reduced price gift certificates (with short expiration dates).

They probably make good money on non-redemptions too.

Re:Groupon

[russotto]

Um, if you "buy" a house and it costs, say, 200k with 40k down and the rest mortgaged, you have a 200k asset and a 160k to pay off. So you have a 40k asset right? No.

You initially have a 200k asset and a 160k liability.

Over 25-30 years it'll cost you around 320k to pay off that 160k, or some other multiple of 160k depending on how fast you pay it off, what the terms of the mortgage is and the interest rate etc. etc.

Sure, but you don't count future liabilities against current assets.