Groupon Share Price Soars as Much as 50% in IPO

Friday, 4 Nov 2011 | 10:48 AM ET

Shares of daily deals website Groupon jumped as much as 50 percent in the company's initial public offering Friday. The stock started trading on the Nasdaq Stock Market under the ticker symbol "GRPN."

Groupon Live
Source: groupon.com
Groupon Live

On Thursday, Groupon priced its highly anticipated IPO at $20 a share, above the expected range of $16 to $18 a share. Groupon had considered pricing its IPO as high as $22 a share earlier in the day, according to people familiar with the matter.

The company's shares ended 30 percent higher in Friday's trading to close at $26.11.

The offering was met with strong demand: The Groupon IPO raised the number of shares in the offering by 5 million to 35 million.

At the $20 offering price, the Chicago-based company now carries a valuation north of $12.5 billion and raised approximately $700 million in proceeds — a figure which could grow if underwriters exercise their option to sell more shares in the overallotment.

Shares have since fallen back to about 30 percent above the offering price.

Groupon Chief Financial Officer Jason Child told CNBC Friday the company has "plenty of room" for growth and that the dollar amount of the IPO is "pretty sizable and right for our business."

Groupon CFO: IPO Pricing
Jason Child, Groupon chief financial officer, weighs in on how he thinks the company's first day of trading will go.

With a quarter million merchants worldwide and revenue per purchasing customer increasing, "We feel as long as our merchants and customers are happy, as they appear to be, we’ll be in good shape."

Analysts at Greencrest Capital, a private company research firm, expect pent up demand to help drive the stock higher on Friday and say the demand could be strong enough to support several days of positive performance thanks to an “imbalance between supply of — and demand for — shares to the social media commerce sectors.”

Whether the company can sustain the momentum remains a major question. Analysts and investors have raised concerns over the company’s long-term viability, thanks in part to slowing revenue growth and the volume of competitors in the daily deals space.

The Groupon IPO has been widely anticipated, particularly given the blockbuster valuations for being tossed around and the encouraging debuts of business-networking site LinkedIn and music site Pandora Media.

Margo D. Beller contributed to this report.

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