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Groupon snatches a great deal ... on itself

Coupon site shares jump $2, valued at $13bn in IPO

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Groupon's IPO has gone better than expected, with shares selling $2 above the expected top price, valuing the company at almost $13bn.

We feared all the pizzazz had gone out of the daily deal site's public outing, after various delays spurred by a rocky market, irregular accounting metrics and an out-of-turn rant by CEO Andrew Mason.

But despite the setbacks, the float was tentatively optimistic with 35 million shares going at $20 a piece, though they were last priced at between $16 and $18.

The coupon website's rumoured entry into public trading was originally estimated to fetch a valuation of $15bn to $25bn, with the upper price seeming the most likely. That was back in March this year, before LinkedIn had floated, soared and then eased back down again, and when the new crop of dot.com companies looked like they could boom on the markets.

But what a difference six months made. In June, Groupon filed for the IPO and immediately ran into issues with an unusual accounting metric. The Adjusted Consolidated Segment Operating Income (ACSOI) rather looked like an attempt to make the firm appear more profitable since it left out marketing and acquisition expenses, the first of which was its largest outgoing.

The Securities and Exchange Commission told Groupon to get rid of the ACSOI figures, but the damage was done and the market started to speculate that the daily deals business model wasn't going to work out, that the cost of getting the customers would always outweigh the profits.

That in turn got CEO Andrew Mason riled up enough to issue an emailed rant to employees about how all the critics were wrong and Groupon was doing brilliantly, which was then leaked. This was quite unfortunate since it was during the IPO quiet period when bosses aren't supposed to talk about how well or unwell their firm is.

And throughout all of this, global markets started to wobble, as the recovery began to look short-lived and the dreaded words "double dip" cropped up again.

Today's pricing is an improvement on how the delayed IPO kicked off at the end of last month, but not by much, and all eyes will now be on social games company Zynga, due to go public at the end of this month, to see if tech stocks are still an attractive catch for investors. ®

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