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Groupon Case Analysis

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Groupon, Inc. has been operating since 2008, offering daily deals and discounts for local businesses. Groupon had rapid growth by the end of 2009, spreading to 28 cities across the United States of America (The History of Groupon). Groupon 's then Chief Executive Officer, Andrew Mason stated in the Security Exchange Commision (SEC) S-1 filling from June 2, 2011 the following:
"We increased our revenue from $3.3 million in the second quarter of 2009 to $644.7 million in the first quarter of 2011. We expanded from five North American markets as of June 30, 2009 to 175 North American markets and 43 countries as of March 31, 2011. We increased our subscriber base from 152,203 as of June 30, 2009 to 83.1 million as of March 31, 2011. We increased …show more content…

Connective Capital Management 's, a hedge fund firm, Rob Romero says, "Groupon is expensive. The $12.8 billion valuation is only achievable because of the low float. Today 's reaction to LinkedIn floating additional share supply is an indication of how tight supply-demand of shares can distort valuation for a new IPO." In addition, Josef Schuster, founder of IPO research and investment house IPOX Schuster stated, "The post-IPO investor will be taking a risk on this deal. It 's maybe a good trade for a day trader, in and out in a single day, but I don 't want to be in it for the long run." In the same article, Reuters authors Alistair Barr and Clare Baldwin hypothesize, "Wall Street will scrutinize Groupon 's Friday (November 4, 2011) showing for clues as to how other highly anticipated dotcom IPOs -- from the likes of Facebook or Zynga -- may fare." Whereas, Boyan Josic, chief executive at DailyDealMedia, which tracks the industry, is more optimistic about the success of Groupon, stating, "[Groupon] is a company with permission to market to 150 million consumers daily. No other company in the world has ever had that type of reach" (Reuters). Groupon was selling 35 million shares of stock and had three main investment bankers, Morgan Stanley, Goldman Sachs, and Credit Suisse. The IPO was offered at $20 and opened to trading on the market November 4, 2011 (NASDAQ.com). The IPO closed at $26.11, a 'pop

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