Groupon IPO Gets Hot Reception, Shares Priced at $20

November 4th, 2011 at 2:11 pm

It seems that tech stocks still get quite the attention in the market. Just when you think that more investors are wiser than buying new but largely untested stock shares, the investing public seems to react differently. Investors seem to want to get their hands on tech stocks, so much so that the demand seems to border at the outrageous sometimes. This type of trend still seems to be going strong, as shown by the demand for Groupon shares on its recent IPO.

Groupon seem to be quite fortunate in that their recent IPO seems to gather a lot of mileage among the investing public. This is the best way to go for any company’s IPO. Groupon experienced such an overwhelming response for its stock that it eventually has to add another batch of shares to appease some of the demand.

The demand drove the price of the Groupon stock to $20, which was higher than what analysts and experts were expecting. At the end of the day, Groupon saw itself being valued at $12.7 billion based on the new stock price. This despite Groupon going through certain trials and investor doubts prior to its initial public offering.

Groupon’s filing for an IPO was initially met with excitement in the stock market. One reason was that the plan was announced just after another company, professional networking site LinkedIn, held a successful IPO. But then concerns about Groupon’s business model and whether it can sustain success on a constant basis cropped up along with questions regarding the company’s accounting procedures. This led to the IPO being delayed for several months as the interest was slowly waning.

But then again, Groupon continued on with its IPO with the help of its underwriters Goldman Sachs, Morgan Stanley and Credit Suisse. The shares made available for sale totaled 35 million, around 6 percent of the company’s outstanding shares. This was after an additional 5 million shares was made available to handle the demand and interest on the newly offered shares.

Some say that the high demand for the Groupon shares was partly because of the limited availability of the shares in the market. It was good enough to drive the share price to $20. But whether Groupon can sustain this performance in the stock market is something worth looking forward to.


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