FACULTY MEMBER FEATURED : ANTHONY CATANACH (ACCOUNTING) DATE: NOV. 4, 2011 MEDIA OUTLET: PORTFOLIO.COM AUTHOR: TERESA NOVELLINO
Groupon Pops, But Has Plenty to Prove Groupon has finally gone public today, with its stock price immediately jumping after trading began this morning, and it became the hottest Internet IPO since Google. But can the heat last? Editor's note: This story was updated at 4:50 p.m. to reflect the closing price of the stock. The deal is definitely on for Groupon. As anticipated, the daily deal pioneer went public with a pop, with its stock debuting at $20 and surging as much as 56 percent, to $31.14, before swinging back to below $30, trading at $27.47 per share as of 3:11 p.m. It slipped to $26.11 per share by the market close. Andrew Mason, the company's chief executive officer, in New York for the initial public offering, was clearly delighted at the company milestone. "With our IPO behind us, I couldn't be more excited about what lies ahead," Mason said in the company blog. What lies ahead is definitely in the minds of investors too. Before the market opened, Groupon had already raised $700 million in its initial public offering—almost a third more than it initially sought—by selling 35 million shares at $20 apiece, according to data compiled by Bloomberg. That put the daily deal company's valuation at nearly $13 billion, making it the biggest Internet IPO since Google raised $1.9 billion in its 2004 initial offering. Groupon is floating just above 5 percent of the company, and that mere sliver of an offering upped the demand even before the stock hit the market. As expected, the institutional investors flipped those shares fast after the stock debut today, walking away with some tidy profits and, perhaps, not looking back. Anthony Catanach Jr., an associate professor in the School of Business at Villanova University and one of the authors of the Grumpy Old Accountants blog, has been watching Groupon with a critical eye and says he is not surprised at the increase today. “My problem is that I’ve got enough gray hair that I remember the dotcom bubble, and it doesn’t surprise me that it came out the way it came out,” Catanach told Portfolio.com. “The investment banks are very good at what they do. They’re very compensated, so they have every incentive to make this a success.”
2011 Media Report Villanova School of Business Page 214