Debate Already Raging on Groupon’s Market Value

by Todd Shriber

Almost immediately after its announcement that it will sell shares to the public, Groupon, the Internet daily deal darling, began stoking debate regarding what its market value will be when the company commences its initial public offering. The arguments seem to be growing louder so far this week.

Groupon’s Securities and Exchange Commission filing shows the company could raise $750 million with the IPO, but there’s debate over that figure as well. Citing unidentified sources familiar with the matter, The Wall Street Journal reports Groupon could look to raise closer to $1 billion, and that would value the company at around $20 billion.

A market cap of $20 billion isn’t a bad place to start as a newly public company, but Bloomberg reports Groupon was “contemplating” a valuation of $25 billion as recently as March.

Now, if you’re feeling like this is California’s Silicon Valley around 1998 or 1999 all over again, there is good reason. Sure, the market has been treated to hot IPOs from LinkedIn (LNKD) and Russia’s Yandex (YNDX) recently, but Groupon could be the first of the more eagerly awaited Internet IPOs, a group that includes Facebook and online video game maker Zynga.

To boot, Groupon certainly has that late 1990s Silicon Valley aura to it with $540.2 million in operating losses since 2008 and more than 7,100 staffers as of March, compared to less than 40 in June 2009, according to Bloomberg.

For better or for worse, a lot of investors may opt to not focus on those numbers. Hey, when first-quarter revenue jumps 1,400%, as Barron’s said Groupon’s did, it’s clear the company has at least one reason to generate plenty of fervor in the market.

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