The Impending Groupon IPO

Groupon has become rather well known for its web ads calling for local discounts for those who join.  A possible buyout from Google Inc. (NASDAQ: GOOG), which Groupon ultimately rejected, brought it even further on the map.  This week came news that Groupon was raising up to $950 million in venture funding.  Now the New York Times is reporting that Groupon will likely come public via an initial public offering in 2011.

What is interesting is that the Google acquisition was said to be for $6 billion or so, but the new valuation being thrown around is as much as $7.8 billion.

Groupon has members get coupons either through email notifications or alerts on Facebook or Twitter, and those coupons can then be shared (hence the ‘Groupon’ name), and then can be printed or even brought up on your mobile device to get the discount.

Generally the model is one that was the same as Restaurant.com proliferated several years ago.  You spend money to buy the coupon, which you then redeem for a higher savings. The local ad this morning being pushed is “$99 for Three Laser Hair-Removal Treatments at Skinovative.”  It says the value is $750.00, which you buy for $99.00 and have savings of $651.00.

Groupon will get an audience if it wants to come public.  There is just one problem, and this is why Google was taking criticism that it would spend $6 billion to acquire the company: the barriers to entry are almost ZERO.

This will only highlight the ‘other new web giants’ that the public may expect to come public.  That would be Twitter and Facebook.

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JON C. OGG