Groupon’s IPO: What You Need To Know

Groupon is expected to finally set a price for its IPO late Thursday, the last in a series of hurdles in its path to go public that have included questions about the viability of its business model and SEC questioning over accounting practices.

Sources have told Reuters and The Wall Street Journal the share price will likely be slightly higher than the $16 to $18 that the company suggested in its previous filings.

If the company sets its share price at $19 or $20, it will be valued at about $12 or $13 billion. Sources toldBloomberg the company has already stopped taking order due to demands for shares.

Plenty of critics aren’t willing to predict a successful IPO, however. One site called it “another example of orchestrated hype that has you in the crosshairs.”

Groupon’s IPO process has been closely critiqued. Here’s how they got to this point:

• Since Groupon filed with the SEC to go public in June, Wall Street has been buzzing with arguments about whether it is worth what was at one point expected to be a $15 billion to $20 billion valuation.
• Critics point to the large percentage of funding its stockholders and directors took off of the table (86%) after its last three rounds, decreasing momentum and an increasing number of large competitors such asAmazon and Google.
• Groupon, muzzled by the SEC quiet period that restricts companies from making some public statements during a period of time surrounding their IPOs, responded with a post from its spokescat. Supporters pointed to Groupon’s 83.1 million subscribers and potential to pivot.
• Meanwhile, the SEC held up the process while questioning an odd metric in the IPO filing that seemed to intentionally direct attention away from Groupon’s marketing costs. Groupon ultimately refiled in Augustusing standard accounting metrics — which turned what had appeared to be operating profits into operating losses.
• Initially, Groupon had planned to raise $750 million. In October, it lowered its goal by about a third and set the goal at between $480 million and $540 million.
• Groupon plans to sell just 4.7% of its outstanding shares, according to Reuters; that would make it the second smallest stake float in the past decade. Offering a small float could push the stock price upward on the first day of sale, as LinkedIn demonstrated earlier this year when its share price on a 9.4% stake soared during its first day on the market.