SAN FRANCISCO – Daily deals pioneer Groupon priced its initial public offering late Thursday at $20 per share.
The price gives based Groupon Inc. a market value of $12.7 billion. That makes Groupon's IPO the second largest by an Internet company behind only that of Google Inc. in 2004."This is not Facebook where they can do no wrong," said longtime IPO analyst Scott Sweet, the owner of IPO Boutique. He called Groupon an "accident waiting to happen."In addition to the 30 million shares Groupon sold through its IPO, the company also sold 4.5 million more shares to its underwriters — which include, among others, Morgan Stanley, Goldman Sachs & Co. and Credit Suisse — to cover over-allotments.Sweet pointed to problems the company has had with the SEC that have led Groupon to restate the way it accounts for revenue, cutting it in half from what it originally reported. The analyst is also one of those who question the company's business model, its high marketing expenses and frantic hiring pace that has swelled its ranks to more than 10,000 employees. That is about four times as many as Facebook.
Another worrisome sign is the amount of Groupon stock being offered to the public. The company is "floating" 4.7 percent of available shares — 30 million —
This has raised concerns that Groupon is trying to boost demand — and thus its valuation — by limiting supply.
Neither CEO Mason, 31, nor executive chairman and fellow co-founder Eric Lefkofsky, 42, are selling any shares in the IPO. Mason's stake in the company is now worth about $938.7 million, given the $20 IPO share price, while the stake of Leftofsky, who is Groupon's largest investor and shareholder, is worth about $2.6 billion.The sale of the 34.5 million shares mean Groupon's initial public offering of stock raised about $690 million, minus investment banking fees and other expenses
They've made out well previously from the sale of stock, though, according to SEC filings: Lefkofsky, Groupon's largest investor and shareholder, received $398 million while Mason snagged $28 million.
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