US online daily deals sensation Groupon said on Friday that it hoped to raise as much as US$621 million from its initial public offering (IPO), less than previously expected.
In a filing with the US Securities and Exchange Commission (SEC), Chicago-based Groupon said it plans to offer between 30 million and 34.5 million shares priced between US$16 and US$18.
That would value the company, which reportedly turned down a US$6 billion takeover offer from Google last year, at around US$10.7 billion, significantly lower than previous estimates of between US$25 billion and US$30 billion.
The IPO is expected within the next two weeks, although Groupon did not reveal an exact date.
Groupon has enjoyed phenomenal growth since its founding in 2008 and initially planned to raise up to US$750 million from its share offering.
However, the markets have plunged since June, when Groupon initially announced plans to go public, and questions have been raised about the company’s business model and accounting methods.
According to the latest SEC filing, Groupon’s revenue has grown from US$1.2 million in the second quarter of 2009 to US$430.2 million in the third quarter of this year.
Groupon said it is still not profitable, but it cut its net loss to US$10.6 million in the third quarter.
“When we see opportunities to invest in long-term growth expect that we will pursue them regardless of the short-term impact on our profitability,” Groupon chief executive Andrew Mason said in a letter accompanying the filing, adding that Groupon would maintain its quirky side.
“We are unusual and we like it that way,” he said. “Life is too short to be a boring company.”
“Success for our investors is not guaranteed ... our path will include some moments of brilliance and others of sheer stupidity,” Mason said.
Some analysts have expressed concerns about Groupon’s business model and competition from rivals such as Living Social, Google and Amazon, which are also offering online local deals.
Trip Chowdhry of Global Equities Research expressed doubt that Groupon could enjoy sustained profitability.
“The competition is very intense, it’s very imitable,” Chowdhry said.
“If you’re [focused on] fundamentals you should stay away, but if you’re a momentum player, go for it,” Chowdry said.
Forrester Research analyst Sucharita Mulpuru was also skeptical.
“The reality is that the business model is still challenged and it’s not something I would encourage anyone to invest in at any valuation,” she said.
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