Shares of Groupon (GRPN) soared as much as 50% at their open Friday morning before retreating a bit as the daily deals leader made a solid debut as a public company despite a number of stumbles along the path to its IPO.
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The IPO could serve as a key test of investor appetite for new-age Internet stocks amid volatile markets and waning enthusiasm about the sector.
Chicago-based Groupon opened at $28, a 40% rise from its pricing of $20 late Thursday. The pricing surpassed the expected range of $16 to $18 and led the company to boost its offering by 5 million shares.
After dipping as low as $25.90 in late morning trading, Groupon's stock closed up 32% at $26.11. Its daily high was $31.14.
By pricing at $20 a share, Groupon received a market valuation of $12.7 billion. While that pales in comparison with expectations from some investment bankers before its setbacks for a price tag of $30 billion, the valuation is still the strongest U.S. Internet IPO since Google (GOOG) debuted in 2004.
That's also a more rich market cap than a slew of well-known companies, including BlackBerry maker Research in Motion (RIMM), aluminum maker Alcoa (AA), Best Buy (BBY), Xerox (XRX) and semiconductor company Nvidia (NVDA).
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After its stock soared beyond $30, Groupon received a market value of almost $19 billion.
Groupon is set to trade on the Nasdaq OMX Group’s (NDAQ) Nasdaq Stock Market under the ticker symbol “GRPN.” The company could sell as much as 40.25 million shares in the offering, which is being led by Goldman Sachs (GS), Morgan Stanley (CS) and Credit Suisse (CS).
The company’s IPO process ran into trouble due to a number of developments, including increased market turbulence late in the summer, concerns about its business model, a leaked memo and scrutiny from the Securities and Exchange Commission over a quirky accounting maneuver that inflated revenue.
In a blog posting, Groupon CEO Andrew Mason called the debut a “small milestone on our journey.” He added, “With our IPO behind us, I couldn’t be more excited about what lies ahead.”
The level of demand Groupon’s IPO garners may serve as a good indicator for Wall Street’s current level of interest in new-age Internet companies. While LinkedIn (LNKD) and Pandora Media (P) enjoyed strong debuts, concerns have increased recently that the sector may be in the midst of a mini bubble.
Facebook, which has a private-market valuation of about $70 billion, is expected to IPO at some point next year.