The Groupon IPO is now a reality and just mere minutes into its foray as public company; Groupon saw massive increase in its valuation. Shares in the now publicly traded company jumped 40% or $28 above its initial asking price, leaving many experts to scratch their heads in bemusement.
What many are questioning is the current estimated valuation of Groupon which currently sits at $18 billion. Hard to believe I know, but Groupon has gone from a business model in doubt to a publicly traded company that is stumping analyst’s expectations. And although Groupon’s 40% increase is nowhere near the 66.7% increase enjoyed by one big tech company in 1999, many are asking if the valuation can be supported by sound business numbers.The company is still yet to turn a profit and has seen many issues in the last few months leading up to the IPO. One of the biggest was the investigation of Groupon’s accounting practices by the SEC. Many are calling the valuation ‘hype gone mad’ and the fact that Groupon’s valuation is second only to Google’s valuation at IPO in 2004 is perplexing indeed.
Still, investors and the markets will ultimately determine Groupon’s fate. It’s one thing to be a privately traded company and not make money, but when you are listed on the stock markets, investors will kill for their pound of flesh. Let’s see how Groupon gets on.
Is Groupon’s $18 billion valuation madness? Share your thoughts below.
Source: http://www.sitetrail.com/2011/11/09/groupon-now-supposedly-worth-18-billion/