The global leader in “daily deals” is now valued at almost $13 billion after saying it increased the offering by 5 million shares to 35 million in total and pricing them at $20 each, above an initial range of $16 to $18.
The debut of the three-year-old company, which sells Internet coupons for everything from spa treatments to nose jobs, is one of this year’s most closely watched. Its tiny float represents just above 5 percent of the company and helped drive up demand and price.
That constraint — one of the smallest floats of the past decade — should support Groupon’s share price when it begins trading on the Nasdaq on Friday under the ticker GRPN, analysts say.
But in the longer run, they cited concerns about competition from the deep-pocketed likes of Google and Amazon.com Inc; the need to spend continuously to drive user growth; and questions about accounting after the company altered its IPO filings twice to change the way it accounted for revenue.
“Groupon is expensive. The $12.8 billion valuation is only achievable because of the low float,” said Rob Romero, head of technology-focused hedge fund firm Connective Capital Management.
Beyond Friday, Groupon shares may prove volatile on concern about the company’s ability to generate long-term profit and revenue growth, plus the likelihood that existing investors will sell some of their holdings at some point.