LivingSocial Holds Off IPO For Now

December 9th, 2011 at 11:32 am

Daily deals site LivingSocial has recently held off its intentions of going public for now. The company has decided to postpone its planned IPO and instead plans to raise around $400 million in funding. The news was first reported at Bloomberg.

The online coupon provider is said to be foregoing its IPO due to the current volatility of the market. The company has been talking to banks earlier this year in trying to set up a $1 billion IPO. But then the experience that current Internet companies are now undergoing after going public may have made it do a double take.

During the latter part of this year, a number of Internet companies have gone through the successful IPO route. One of them is the leading daily deals site and LivingSocial’s main competitor, Groupon. The Groupon IPO gave the Internet company a valuation of around $13 billion and went public at a time when interest in such stocks was at a high.

But the current volatility in the market has seen Groupon’s stock price swing unpredictably. The wild swings have seen Groupon’s stock go from $15 at one point to $21 on day to day trading. It started last month at $20 per share and has went on to reach a high of around $26. The erratic price swings may have made LivingSocial to rethink their own plans of going public in such a volatile market.

Living Social may not be the only Internet company that may have postponed their own IPO. Zynga, a social gaming company, has intended to hold its own IPO this September. But concerns about market volatility have also made it delay the process for the meantime. It seems that both companies may have made the right decision.

For its part, Living Social is eyeing raising up around $400 million in funding instead of an IPO. It aims to come up with the amount in the form of equity and debt. So far, LivingSocial has raised around $176 million, the total amount of which will be used to fund the operation and growing the business as it expands to offering its services to other US states.


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