The e-commerce site which exploits the concept of grouped purchases has sold half a billion dollars worth of shares, with this only being the beginning. Groupon is planning a stock market listing for the end of 2011.
Launched in November 2008, Groupon works on the theory of grouped purchases to offer holidays and activities in more than 300 North American and European cities. The site negotiates their offers directly with sales representatives and offers them to their user community. If the promotions gain enough interest, the deal is confirmed.
The American site was recently widely mentioned in the media after they refused a take over by Google for close to 6 billion dollars. If the deal had gone through it would have been the largest acquisition ever undertaken by Google.
According to Business Insider, if the transaction had gone through it would have provided Groupon’s co-founders Eric Lefkofsky and Brad Keywell 600 million dollars and 1.8 billion dollars respectively. This was perhaps not enough when it is believed the service could earn billions of dollars in revenue. Some sources also believe that the deal may have been cancelled due to concerns that it would have run into anti-competition issues. This refusal has nevertheless left more than one observer unconvinced.
Having said this, the excitement around Groupon hasn’t finished, with the site planning a stock market listing by the end of 2011. According to a document filed with the United States stock market regulators that was provided to the AFP, Groupon has announced that they have sold 500 million dollars of stock since the middle of December. The operation had the aim of raising 950 million dollars in total. There is therefore 450 million dollars worth of Groupon shares still available.
Investors should be aware that competition is starting to develop with LivingSocial this month receiving a 183 million dollar investment from a major e-commerce player – Amazon.