Groupon shares rise 46% in early trading

After a tumultuous journey, Groupon Inc. is finally trading. Early reports from news agency Reuters say that shares in the group buying site rose 46% in “hectic early trading on Friday”.

This puts the shares at US$29.15 or 46% above the company’s US$20 IPO price a few minutes after opening on the Nasdaq, says Reuters. This gives the company an US$18-billion valuation.

According to the news agency:

“The company on Thursday sold 35-million shares for US$20 each, raising US$700 million. It had filed with the U.S. Securities and Exchange Commission to sell 30 million shares for US$16 to US$18 each.”

According to The Chicago Tribune the 35-million shares sold by the group buying darling, which consists just about six percent of the company’s stock, is smallest “float” of any IPO this year, according to researcher Dealogic PLC. “Such limited supply is expected to keep the stock price high, allowing early investors to flip their shares for quick profits, analysts and investors say,” says the Tribune.

Groupon joins the ranks of other social media sites publicly trading on the New York Stock Exchange. LinkedIn Corp., which more than doubled from US$45 to US$109 on its first day of trading in May was one of the first to begin trading. China’s biggest social network, Renren, followed with a soaring start raising US$743.4-million through the sale of 53.1-million American Depositary Shares.

Groupon is present in 175 North American markets and 45 countries and has 142.9-million subscribers, it said. It sold 33-million “Groupons”, or discount coupons, in the third quarter of the year.

In a letter accompanying the filing, Groupon chief executive Andrew Mason (who rang the opening bell) said the company would continue to “aggressively invest in growth”.