Groupon’s financial future secured for now

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While the fate of the Groupon IPO has not always been obvious, Wall Street has officially turned its attention and its checkbooks toward the adolescent company since it went public Nov. 4.

Since stepping foot on Nasdaq’s global stage, the stock has fluctuated between $24 and $34 from its starting price at $20. For many, this represents much more than the success of a single company. Rather, it has become a situation akin to a group entering a dark room in which Groupon elected itself to go first.

[media-credit name=”Associated Press” align=”alignright” width=”300″][/media-credit]
Employees and guests of Groupon, celebrate the company's IPO at Nasdaq, Friday, Nov. 4, 2011 in New York. CEO Andrew Mason is center rear. Groupon, the company that pioneered online group discounts, has begun trading as a public company. The stock jumped nearly 50 percent in the opening minutes Friday. (AP Photo/Mark Lennihan)
So far, so good.

Several news agencies, including MSN, cite Aaron Levie, CEO of StartupBox.net, as one of those whose confidence has increased in the ability for IPOs to survive the process of going public.

“There was a collective sigh of relief in the [Silicon] Valley among startups, investors and bankers, as this will open the gates to more IPOs that were ‘on hold’ until Groupon tested the waters,” Levie said.

While many remain optimistic, however, others warn that the hype may fizzle out to the detriment of investors.

One of those voices of concern includes Lise Buyer, the founder of Class V Group, an IPO advisory firm.

“The company’s banks were able to successfully place the shares offered, but the ultimate success of this company as a public entity will now totally depend on how management deploys the new cash in an effort to build a sustainable business,” she said in a quote in Bloomberg Business Week.

Financial Times’ David Schwartz compared Groupon’s debut to Pandora Media’s whose stocks rose from $16 to $26 almost immediately but now hover around $14.

Still others said Groupon is to be respected for all it’s accomplished up to this point.

MSN and others cited the same quote from Vivek Ranadive,  founder, chairman and CEO of TIBCO Software, which casts Groupon as the all-American dream come true.

“This is the largest creation of wealth in the shortest period of time in human history: Over $10 billion in three years,” Ranadive said. “They have hired 10,000 people, helped 250,000 small businesses who in turn have had to hire more people as well. In fact, they have done more for unemployment and the economy than Congress and the administration combined. So people get jobs, small business get revenue plus new customers, and investors have seen incredible value — sounds like a win-win-win. We should be applauding American ingenuity.”

BYU students are among those who benefit from Groupon’s deals.

Derrick Lytle, a senior majoring in communications, said he signed up nearly a year and a half ago and has used it ever since.

“My favorite deal is with Sammy’s in downtown Provo,” Lytle said. “Just recently I’ve been noticing some good travel packages to places like Zion National Park.”

Daniel Willy is a junior studying electrical engineering. He said he has used Groupon for different kinds of deals.

“I’ve bought my wife a few massages, a friend a pedicure and some really good deals at restaurants,” Willy said. “I check it nearly every day.”

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