Shares of Groupon (NASDAQ: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.
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.
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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 (NASDAQ: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 (NASDAQ:RIMM), aluminum maker Alcoa (NYSE:AA), Best Buy (NYSE:BBY), Xerox (NYSE:XRX) and semiconductor company Nvidia (NASDAQ:NVDA).
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 (NASDAQ: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 (NYSE:GS), Morgan Stanley (NYSE:CS) and Credit Suisse (NYSE: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 (NASDAQ:LNKD) and Pandora Media (NYSE: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.