Groupon’s valuation of itself has halved. It plans to go public on 4th November and its latest filing sets a price range that will give it a $11 billion valuation. That’s quite a come down from the $25 billion it stated in June, but in sync with its restated revenues that are half of what they were initially supposed to be.
The daily deals company plans to sell 30 million shares at $16 to $18 a pop, which would see Groupon raise between $480 million and $540 million. This would give Groupon a valuation as high as $11.4 billion.
Groupon continues to have its detractors.
“It’s like watching a Ben Stiller movie and waiting for the next painful moment,” says Mulpuru, the Forrester analyst.
It has had to restate its earnings and faced several defections from its management team. It is fighting more intense competition and rising customer & vendor complaints. There are concerns over the conversion rate of its subscriber list and high subsriber acquisition costs (it spends 50% revenues to acquire subscribers and only 20% subscribers buy Groupons). There is also another problem …
Traditionally, investor money is used to grow a business before it goes public. But according to Groupon’s SEC filings, $810 million of the $946 million it raised went to early investors and insiders. That includes $398 million to Groupon’s largest investor, shareholder and executive chairman, Eric Lefkofsky.“Taking this money raises questions about the integrity of the company and enormous questions about the quality of the management team,” says Mulpuru. “Groupon’s primary problem first and foremost is greed.”