Nov. 3, 2011, 7:35PM: As expected, Groupon's underwriters just priced its IPO at $20/share, above the $16-$18 range set earlier this month, but a dramatic comedown from initial price talk of $50/share in June when Groupon first filed for its IPO. Groupon is expected to open for trading tomorrow shortly after the opening of stock market trading, where PrivCo expects the stock will open at an initial pop due to normal behind the scenes engineering by underwriters as well as small retail investor curiosity. PrivCo expected the modest pricing above the stated range - a range that was vastly discounted since June - in order to provide Groupon with a much needed seemingly positive headline Friday morning before trading opens.
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Groupon's pricing comes after a near-record of over 7 IPO amendments in as many weeks - including one in which the company was forced to slash its reported revenues by nearly 60%.
"As expected, Groupon's IPO was priced slightly above the most recent range, providing a much needed positive headline before the open of Friday morning trading," says Sam Hamadeh, CEO of PrivCo.com LLC, the private company financial data provider. "Most institutional investors seemed to be looking to hold Groupon stock for days not months, as small retail investors are expected to buy the familiar brand name on the open regardless of the company's financial condition."
The $20 price tag puts Groupon's valuation at $12.7 billion, a far cry from the $30 billion price rumored in June. Notably, the price is below some secondary market buying that valued Groupon at $14-$16 billion.
"This is the first time since the emergence of private shares pricing we've seen an IPO price go below the secondary market price leaving some pre-IPO buyers underwater at the IPO price," adds Hamadeh.
According to PrivCo research, Groupon's offering of only about 5% of its shares is the lowest floats ever offered in an Internet IPO, all but guaranteeing a brief initial pop. Comparison with other major private Internet companies' float offered at IPO filing:
Internet IPO Floats:
(Source: PrivCo.com research)