Given the rocky run up to Groupon's IPO, Web watchers were shocked on Friday by Wall Street’s embrace of the company.
“Groupon -- an Internet darling with no
profits but plenty of momentum -- stunned Wall Street on Friday with a premiere that echoed the dot-com boom,” reports The Wall Street Journal.
“Groupon’s IPO attracted interest even as internal
missteps, unprofitability and an expensive valuation compared with its peers made some investors skeptical,” Bloomberg writes.
As AllThingsD first
reported on Thursday, Groupon priced its public offering at $20 a share, several dollars above the expected price range of $16 to $18. “That will garner $700 million for the start-up, which is
only several years old, at a valuation of close to $13 billion,” it noted.
As such, “The size and price were designed to benefit from a surge in first-day buying,” according
to Bloomberg, citing comments from Sam Hamadeh, CEO of New York researcher PrivCo.
What’s more, “The company lost $420 million last year and $117.1 million in the first quarter of
2011 mainly due to expansion and marketing costs,” TechCrunch reminds us -- “a fact that does not go unnoticed by potential investors and armchair Twitter pundits many of whom could not resist the ‘sign of a
bubble/apocalypse’ talk or lame deal jokes this morning.”
Likewise, “In Groupon some see echoes of the late-90′s dot-com boom, where young Internet companies with
little or no revenue rushed through to the IPO process, only to go bust in the months that followed,” seconds VentureBeat.
Whatever happens to Groupon’s stock, “The offering, one of the largest in recent years, is an important barometer of investor appetite for
IPOs,” notes Reuters. “A strong first few trading days could help the prospects of other private Internet companies -- such as Angie's List, Zynga and even Facebook -- to pursue
their own IPOs.”