LivingSocial may be reconsidering IPO, report says
LivingSocial might opt for a round of funding rather than file for their IPO, according to a Bloomberg report. The daily deals site is said to be in talks to raise $200 million.
It looks like LivingSocial, the second-most popular daily deals site, may be getting cold feet about filing for an initial public offering. Bloomberg reports that LivingSocial is in talks to raise $200 million for a valuation of $6 billion, rather than following in Groupon's IPO footsteps. Filing for an IPO post-funding, however, has reportedly not been ruled out.
In June, LivingSocial was in talks with investment banks to launch an IPO valued at $1 billion.
Crazy market swings and a perceived slowdown in the daily deals market have raised some concerns about going down the IPO path, according to Bloomberg.
The last round of funding for LivingSocial occurred in April, when co-founder Tim O'Shaughnessy raised $400 million. The company now has $627 million from investors such as Grotech Ventures and e-commerce site Amazon.com.
The Washington, D.C.-based Web site peaked in traffic in June, though fewer visitors visited LivingSocial last month, according to ComScore. LivingSocial has 43 million members, with 575 daily-deals markets globally, and expects $1 billion in revenues this year, CNET previously reported.
But deal fatigue appears to have set in. LivingSocial experienced a 3 percent revenue drop to $45.1 million in August. And 170 of 530 daily-deal sites have either disappeared or been sold, according to a report put out by deal aggregation site Yipit.com.
Google offered to acquire deals-site leader Groupon for $6 billion, but it decided to pass on that and file for a $750 million IPO in June. Though it's struggling to turn a profit. Further complicating matters, Groupon is considering delaying its IPO due to the turbulent stock market.
The New York Times reported that Groupon spent $18 million to add 3.7 million subscribers in the second quarter of last year. And it seems to be working. Groupon owns 53 percent of the daily-deals market.
Big players with big customer bases, however, may disrupt LivingSocial and Groupon's straightforward business model of acquiring e-mail addresses. For instance, this week e-commerce firm Rearden Commerce announced $133 million in funding from American Express, JPMorgan Chase and Citi for its acquisition of social-buying service HomeRun.com and its OfferEngine platform.
The group buying model has had its fair share of copycats. As Yelp and Facebook shed their daily deal, others have made more aggressive moves in the market. For instance, Google's recent acquisition of Zagat and its slow-to-start Google Offers shows the search giant's interest in the daily deals space.
Peter Krasilovsky, a vice president at BIA/Kelsey previously told CNET that the deals market is quickly evolving, even if it ceases to exist in its current form. One-size daily deals don't fit everyone. Not even Groupon. That's why the model is morphing.
But no one will argue about a good deal. LivingSocial recently offered a $20 Whole Foods coupon at a price of $10. Soon enough, nearly a million deals were sold.