Image Source: Reuters via New York Times
Groupon’s final IPO price went from dank estimates of $10-$12 to $20 by the time it was priced, raising $700 million on a relatively small offering of its shares. That puts the company’s value at around $20 billion, by some estimates.
As it turned out, the price could have gone even higher. Prices soared 40 percent above the asking price in the offering’s early hours.
What went right?
1- Investors believe in the long-term vision that deals represent just an anchor for a wide variety of local and national marketing services.
2- They believe that Groupon has established a brand and will outlast the fly-by-night competition and adjust to compete against major players now entering the market, such as Google and Amazon.
You know the stupid waste of money on the Super Bowl ads? Not so stupid. They really branded the company as a major play for the investment community.
Next up for local IPOs: Angie’s List, which wants to raise $113 million; AutoTrader; and (based on today’s success) LivingSocial.
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There is no doubting their success as they reached their IPO. Long-term sustainability and viability are still in play, however. One thing is for sure, which is that they have made local marketing as performance-based as merchants have ever seen. The idea of “buying customers” is what merchants want from their marketing, and now it is real to them. Of course the question of the quality and type of customer their buying may be questionable. However, that impact on other marketing channels is profound – now all marketing aspires to be performance-based or is expected to be that way. Those challenges will be felt by both merchants and those selling them marketing for the foreseeable future, and will require more attention to and involvement in the entire marketing process.