LivingSocial balks at IPO, raising funds instead, report says
The daily-deals provider won't follow its chief competitor, Groupon, to the IPO market anytime soon, it seems.
Daily-deals provider LivingSocial has decided against an initial public offering for now.
Rather than test the IPO market, LivingSocial's management has decided to raise $400 million in funding, based on a $6 billion valuation. According to a Securities and Exchange Commission filing outlining its plans, LivingSocial has already raised $176 million of the sum.
Bloomberg, which was first to report on the funding yesterday, cited sources who claimed the entire amount will come in the form of both equity and debt.
Back in June, LivingSocial was rumored to be eying a $1 billion IPO, based on a valuation of between $10 billion and $15 billion. However, after balking at filing its IPO papers, Bloomberg reported that the company was instead deciding to raise $200 million on a $6 billion valuation.
Delaying an IPO might be one of the best moves LivingSocial can make right now. Over the last several months, the IPO market has been tough on startups as stocks swing wildly from day to day. Social-gaming company Zynga, which has made its IPO intentions known, was expected to go public in September, but eventually delayed its IPO over concerns that the market was too volatile.
LivingSocial's apparent decision to secure new funding now, rather than go public might also have something to do with its chief competitor, Groupon. That company, which went public last month at $20 per share, saw its stock soar in the first day of trading to $26.11. Since then, Groupon shares have been swinging wildly, dropping down to about $15 at one point before climbing back up to $21.15 yesterday.
So, if it isn't going public, what is LivingSocial using its new funding for? According to Bloomberg's sources, the cash will be used to fund operations and grow the business.
LivingSocial did not immediately respond to CNET's request for comment on the Bloomberg report.