Groupon IPO oversubscribed, shares price at $20--reports
The daily deals giant appears to have created an updraft for its initial offering, which was heavily oversubscribed.
Groupon priced its IPO at $20 a share, above its expected range of $16 to $18, in a heavily oversubscribed offering that led the daily-deals site to sell an additional 5 million shares, according to reports.
The increase in offering price, which had been expected, brings Groupon's valuation to $12.7 billion. Shares of the Chicago-based company stock were oversubscribed by a factor of 10, AllThingsD reported.
Groupon upped the number of shares it will offer tomorrow to a total of 35 million. That still represents only 5.4 percent of its 637.3 million shares outstanding.
Demand for the unseasoned stock seems high in part because that share "float" is so small, essentially creating an artificial scarcity that drives up prices. Of course, Groupon has also been the subject of intense media attention thanks to lingering questions about the sustainability of its business model and its penchant for dodgy accounting.
While industry analysts express concern about Groupon's ability to maintain its rapid growth, they note that Groupon pioneered the daily deals category just three years ago and remains the frontrunner despite hundreds of copy-cat companies that have cropped up.
"It's the leading deals company in the United States," Peter Krasilovsky, an industry analyst with BIA Kresley, told CNET. "It remains the model for the industry." This year BIA Kelsey estimates Americans will spend $2 billion on daily deals offers. By 2015, that number will grow to $4.2 billion spent on daily deals, instant deals and flash sales.
Goldman Sachs, Morgan Stanley, and Credit Suisse are leading Groupon's underwriting. On Friday, Groupon shares are expected to begin trading on Nasdaq under the symbol "GRPN."