The much sought after Groupon IPO seems to be on the calendar again. Unfortunately for Groupon, they were a little late to the party. Speculative internet companies like Pandora (P:NYSE) and Renren (RENN:NASDAQ) took advantage of the broader market conditions and a roaring IPO market and captured a first day valuation that is regretted by many investors who went long the respective names.
But that was the market back then, and we all have seen how quickly conditions change. During our last phase of IPO mania, Groupon had a valuation that was much larger than many of the recent past offerings. IPO services still expected shares of Groupon to be heavily oversubscribed with a sizable first tick premium that is usually only seen in smaller deals.
Now how will a Groupon IPO play out now ? Well that remains to be seen, especially since social media icon companies like Facebook and Zynga have pushed back their plans to go public in the near term. However, if Europe doesn’t implode, it’s probably still reasonable to say that a Groupon IPO could be at least 10 to 20x oversubscribed because of it’s name brand and impressive roster of VC investors.
GROUPON IPO Has Investors Busy
Just keep one thing in mind when the Groupon IPO trades. Shorts swarmed on LinkedIn (LNKD:NASDAQ) which is obviously a step up in quality from some of the hotter IPO’s that have traded in the past two quarters. So if Groupon trades in October or November as some are estimate, don’t get too excited for a monster aftermarket trade. Based on the recent trend, the talking heads will probably be constantly discussing the date when shares of Groupon will be available to borrow to short. They did it with LinkedIn and within 5 days, LNKD dropped more than 50 points from it’s first day high.
So for now, take the Groupon IPO hype with a grain of salt if you are expecting to only play it on an aftermarket basis.
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