On Thursday night, Groupon will finalize its IPO, and on Friday, shares will trade under the GRPN ticker on the Nasdaq. According to a report from Reuters, it looks like the deal could price between $19 to $21, compared to earlier expectations around $16 to $18 — and at $21, that would put Groupon’s valuation at roughly $13 billion. So it looks like there’s heavy demand for the offering.
But when talking to many Silicon Valley CEOs this week, I found no one who was interested in Groupon. They are highly skeptical of the company’s business model, as well as its ability to create sustainable profits.
Despite all this negative opinion — which also has been nearly universal in the media — the IPO itself should be solid. Helping the case is that Groupon’s underwriters — Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) — cut the valuation on the deal by about half and will only issue 4.7% of the outstanding shares. It’s just a matter of normal demand and extremely short supply of stock. Read