Groupon's IPO biggest by US Web company since Google

Groupon Incorporated raised $700m after increasing the size of its initial public offering, becoming the largest IPO by a United States Internet company since Google Incorporated raised $1.7bn in 2004.The global leader in "daily deals" is now valued at almost $13bn after saying it increased the offering by five million shares to 35 million in total and pricing them at $20 each, above an initial range of $16 to $18, according to Reuters.The debut of the three-year-old company, which sells Internet coupons for everything from spa treatments to nose jobs, is one of this years most closely watched. Its tiny float represents just above five per cent of the company and helped drive up demand and price.That constraintone of the smallest floats of the past decadeshould support Groupons share price when it begins trading on the Nasdaq on Friday under the ticker GRPN, analysts say.But in the longer run, they cited concerns about competition from the deep-pocketed likes of Google and Amazon.com Incorporated; the need to spend continuously to drive user growth; and questions about accounting after the company altered its IPO filings twice to change the way it accounted for revenue."Groupon is expensive. The $12.8bn valuation is only achievable because of the low float," said Rob Romero, head of technology-focused hedge fund firm Connective Capital Management."Todays reaction to LinkedIn floating additional share supply is an indication of how tight supply-demand of shares can distort valuation for a new IPO."LinkedIn, which remains well above its $45 IPO price, plummeted nine per cent after-hours after unveiling a proposal to sell up to $500m in stock. It had floated 8.3 per cent of its shares during the IPO.Pandora Media, a music streaming service and another recent dotcom debutante, sold 9.2 per cent of the company.At $12.8bn, Groupon commands a price tag more than twice what Google offered to buy the company last year.Beyond Friday, Groupon shares may prove volatile on concern about the companys ability to generate long-term profit and revenue growth, plus the likelihood that existing investors will sell some of their holdings at some point.
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