Updated: The Deal Is On! Groupon Gets $700 Million IPO, Stock Up 31 Percent

There may be hundreds of competitors out there, but Groupon (NSDQ: GRPN) this week has confirmed itself as the biggest daily deals site of them all, not just in terms of users but value, as it raised $700 million in its IPO — the biggest in tech since Google (NSDQ: GOOG) — valuing the company at around $12.8 billion as it started trading today on NASDAQ as GRPN. The result may have been a surprise to some, considering the bumpy road Groupon took to get there.
And the result may have even been something of a surprise to Groupon and its financial advisers: the company had originally planned to sell 30 million shares priced between $16 and $18, before increasing the number to 35 million priced at $20.
The price of those shares closed up 31 percent on the day, up $6.11. At various points during the day the stock flirted with the $30 barrier before settling down as the weekend arrived.
The $700 million raised sets a record for recent IPOs and could set the pace for what will be expected of other IPOs still to come, such as those from Facebook and Zynga. Still, Groupon’s public financing round is still less than half of what Google raised in its IPO in 2004, of $1.9 billion.
However, opinion seems divided over whether the company will be able to sustain the hype that is surrounding the company today. Over the past several weeks there have been plenty of questions raised about the company:
Perhaps most significantly, there is the number of companies mimicking its business model of offering daily discounts for goods and services, and whether the company will be able to grow as fast as it has as a result — not to mention whether longer term people will remain interested in the proposition of buying through sites like it.
Living Social, Amazon (NSDQ: AMZN), Google and Facebook are just four names to watch in this space, and that’s before you even get to the many local and more vertically focused daily deal offerings out there. (One of the sites I use most here in London is a one that only offers daily deals on food.)
The company has also been the subject of scrutiny over how it runs its accounting and at one point had to restate some figures along more traditional metrics.
When Groupon was in a quiet period leading up to the IPO, an internal memo leaked out from the CEO, Andrew Mason, in which he tried to rally the troops in the face of naysayers, which painted an unflattering picture of the company, however you looked at it.
Some of those issues are longer-term ones, but others appear more immediate. As Bloomberg notes, in September Groupon owed twice as much in payouts to its merchant partners as it had in cash. Marketing was up by 37 percent in the last quarter as well to cope with the rise in competition and as Groupon tried to ride the wave of its growth as a business.
Although the company has claimed it would be “wildly profitable” soon, in the first three quarters of this year it has had a net loss of $214.5 million.
In August, it was reported that Groupon had some 115 million subscribers worldwide.