Jumping On the Bandwagon, Groupon Files for a $750 Million IPO
Groupon just filed for what should be one of the largest IPOs in years — jumping on the IPO bandwagon just two weeks after LinkedIn's big jump on its offering.
The deal-a-day company is looking to raise $750 million, underwritten by Morgan Stanley, Credit Suisse and Goldman Sachs — offering shares from the company and existing shareholders.
Groupon revealed some striking growth — revenue of $644.7 million in the first quarter of 2011, up from $44.2 million in the first quarter of 2010, and just $3.3 million in the second quarter of 2009. The company's trajectory has been staggering — it was founded just in November 2008, and has grown into a massive global business. In the first quarter it sold over 28 million vouchers, nearly hitting the 30 million vouchers it sold in *all* of 2010.
But Groupon is not currently profitable — posting a net loss of $113.9 million (net loss attributable to common stockholders of $146.5 million, while in the year-ago quarter the company posted a gain of over $8 million.
Why the shortfall? Investments in acquiring new subscribers. CEO Andrew Mason took great pains in a "letter to potential stockholders" to explain his strategy of investing in growth. He writes: "When we see opportunities to invest in long-term growth, expect that we will pursue them regardless of certain short-term consequences."
Mason goes a step further to stress his interest in expansion: "Expect us to make ambitious bets on our future that distract us from our current business. Some bets we'll get right, and others we'll get wrong, but we think it's the only way to continuously build disruptive products."
Mason is a notoriously quirky CEO and is even taking a non-traditional approach to his salary. He elected to drop his annual salary to just $575 after making $150,000 last year. But he'll certainly cash in on this IPO — he owns 23 million shares, 7.7 percent of the common stock. But he's not the largest shareholder, his co-founder is — Eric Lefkosfky, who owns 21.6 percent, 61.4 million shares. And this is just another win for Accell Ventures, which backed Facebook — it owns 5.6 percent. New Enterprise Associates owns 14.7 percent.
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