Daily-deals giant ends its first trading day as a public company with a stock that popped and stayed hot.
Groupon, the brash and much-criticized daily-deals pioneer, did it.
Shares of the 3-year-old Internet company closed at $26.11 today on the Nasdaq, a jump of more than 31 percent from its offering price of $20. That leaves Groupon with a market valuation of about $16.7 billion, almost three times the buyout offer from Google it rejected in December, and surely enough to reignite the debate of whether Bubble 2.0 is here.
Today's valuation makes Groupon nearly as big as Yahoo, 10 times the size of AOL, and more than 15 times the size of The New York Times.
Groupon's offering is a clear success, even considering that early projections gave Groupon a valuation of as much as $20 billion. Chicago-based Groupon is losing money, it's had to restate its financials, and its business model is hardly a sure bet.
Even with today's big jump--which occurred on an otherwise down day on Wall Street--Groupon's shares at one point looked like they would do better. The stock climbed above $31 a share in early trading before reversing course.
And compared with LinkedIn, which went public in May, Groupon's showing wasn't at all impressive. LinkedIn saw its stock close up 109 percent on the first day to close just above $94.
But make no mistake: The investment bankers, company insiders, and those institutional investors fortunate enough to get in at the offering price, are thrilled. Groupon employees wore green T-shirts with the ticker symbol "GRPN" printed on them and stayed glued to TVs throughout the day--a scene that in itself is reminiscent of the go-go years of the 1990s.
Surely the champagne is flowing at Zynga as well. The San Francisco-based game maker is hoping to go public later this month and is expected to price in the next few weeks.
And Unlike Groupon, Zynga is making money. Zynga posted net income of $12.5 million on revenue of $306.8 million in the quarter that ended in September, according to an updated filing Zynga made today with the Securities and Exchange Commission.
Even though money-losing Groupon made it public, that doesn't mean it's now a smart investment. Far from it. Even on ever-bullish Wall Street it's hard to find an analyst who doesn't call it risky.
"Groupon will be a very volatile stock with a high level of trading risk until the business model unfolds," said Kathleen Shelton Smith, principal of Renaissance Capital, an IPO investment adviser based in Greenwich, CT.
Yup, she said "until the business model unfolds." Let the bubble talk resume.
Update at 4:20 p.m. PT: with additional details.