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BY CATIE LAU

 
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Popular daily deals site, Groupon will go public on November 4 -- but at a much lower price tag and offering than June valuations. MSNBC explains.


Anchor: “Groupon, the world’s biggest online coupon site, is finally ready to launch its IPO, but now with a much scaled-back offering of 30 million shares, at a price range of 16-18 dollars -- that is dialed down considerably from the 750 million that Groupon originally hoped to raise.”


This scale-back is due in part to a gaffe earlier in the year that revealed Groupon’s revenue was $688 million, as opposed to the $1.5 billion it initially reported. Analysts on CNBC say this is a very significant drop.


Anchor: “The most important number this morning is the valuation, a lot of people have talked about this company valued at something on the order of 25 to 30 billion dollars just three months ago, today that valuation is 16 to 18 bucks a share, brings it down to somewhere between 10 and about 11.3 billion dollars.”


A writer for Forbes points out that Groupon’s unorthodox business model is making investors nervous.


“There have been plenty of questions swirling around Groupon’s business model, most prominently the fact that the company is not yet profitable, though losses have shrunk recently.  Groupon’s net loss in the third quarter through Sept. 30 was $10.57 million, compared to $101 million in net losses in the second quarter.”


But despite these closing margins, experts still aren’t sure that it’s the greatest deal--or the smartest. Bloomberg’s Paul Kedrosky points out -- Groupon intends to cut marketing spend -- a move investors should be wary of.


“The business has not shown that in the absence of marketing spend, that there is a real business here that doesn’t consume prodigious amounts of capital as far out as you can see. And as a matter of fact the little laboratory test we just ran, we talked about it last week, was that if you shrink marketing spend at Groupon, what happens, no surprise, you get on an operating income basis, break even, but the business slugs into a wall.”
 
 
Transcript by Newsy

Business News

Groupon Ready to Hit NASDAQ After IPO Scaleback

October 22, 2011
(1:54)
After scaling back its IPO, Groupon is finally ready to go public.
   
TRANSCRIPT

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